legal guide to doing business in brazil

I n v e s t m e n t s i n B r a z i l

S t e p - b y - S t e p

TradeNetBrazil

Ministry of Foreign RelationsGeneral Department of Trade PromotionTrade Promotion Programs Division

TradeNetBrazil

Acknowledgement

This Investor�s Guide, prepared by the Digital Centre for the

Development of São Paulo, has been ceded for publication and distribution by

BrazilTradeNet (www.braziltradenet.gov.br) under the auspices of a Technical Co-

operation Agreement for the promotion of investments signed on 17 December

2001 between the Brazilian Federal Government, through the offices of the Ministry

of Foreign Relations, and the State of São Paulo, represented by the Secretariat

for Science, Technology, Economic Development and Tourism. The Digital Centre

for the Development of São Paulo is jointly maintained by the Secretariat and the

São Paulo State Official Press.

Since the original Guide ceded by the São Paulo State Government

focused exclusively on São Paulo, the Ministry of Foreign Relations� Trade

Promotion Department has adapted it by including data for Brazil as a whole in its

contents.

Edition 2004

Investments in Brazil Step-by-Step

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Index

1. Foreign Capital . ..................................................................................... 071.1. General considerations ..................................................................... 071.2. How to register foreign capital ........................................................ 071.3. Remittance of profits ....................................................................... 071.4. Reinvesting profits ............................................................................ 081.5. Repatriation ...................................................................................... 081.6. Restrictions on remittances abroad ................................................. 08

2. How to Open your Company . ........................................................... 092.1. Legal ways to start a business .......................................................... 092.2. How to register a business ............................................................... 10

2.2.1. Individual businessman .......................................................... 102.2.2. Simple partnership (S/S) ........................................................ 132.2.3. Private limited company (LTDA) ........................................... 152.2.4. Corporation (S/A) ................................................................... 182.2.5. Cooperatives ........................................................................... 21

2.3. How to avoid problems when choosing the business location...... 232.4. How to obtain the business permit ................................................. 23

3. Labor Legislation ................................................................................... 243.1. Types of contracts .............................................................................. 24

3.1.1. Temporary contracts .............................................................. 243.1.2. Fixed term contracts ............................................................... 243.1.3. Indefinite term contracts ....................................................... 25

3.2. Bank of hours .................................................................................... 263.3. Labor and social security charges ..................................................... 26

4. Foreign Labor . ....................................................................................... 294.1. Types of visas .................................................................................... 29

4.1.1. Visa for short-term business travel ........................................ 294.1.2. Temporary work visas ............................................................ 294.1.3. Temporary visas for professionals .......................................... 294.1.4. Foreign journalist visa ............................................................ 304.1.5. Permanent working visa ......................................................... 30

4.2. Registration on entering Brazil ........................................................ 304.3. Preparatory travel for temporary or permanent work purposes .... 304.4. Work by spouse and children ........................................................... 304.5. Employment booklet for foreigners ................................................. 31


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4.6. Foreign labor in Brazil ....................................................................... 314.6.1. Documents required for foreigners having

a permanent visa ..................................................................... 314.6.2. Documents required for foreigners having

temporary work visas ............................................................. 31

5. International Contracts of Intellectual Property . ......................... 325.1. General aspects ................................................................................. 325.2. Trade marks ....................................................................................... 32

5.2.1. Validity term ........................................................................... 325.2.2. Obligations of the title-holder ............................................... 325.2.3. Procedures ............................................................................... 32

5.3. Patents ............................................................................................... 335.3.1. Previous search ........................................................................ 335.3.2. Validity term ........................................................................... 345.3.3. Obligations of the title-holder ............................................... 345.3.4. Procedures ............................................................................... 345.3.5. The patent application ........................................................... 34

5.4. Contracts of technology transfer ..................................................... 355.5. Franchising ........................................................................................ 35

6. Economic Indicators for Brazil . ......................................................... 376.1. Gross Domestic Product (GDP) ....................................................... 376.2. Inflation rates ................................................................................... 376.3. Interest rates ..................................................................................... 376.4. Exchange rates .................................................................................. 386.5. Direct foreign investment in Brazil ................................................. 38

7. The Information Technology Industry . .......................................... 397.1. Introduction ...................................................................................... 39

7.1.1. Taxes ........................................................................................ 397.1.2. Registration of software ......................................................... 39

7.2. The New Information Technology Law ......................................... 407.2.1. Introduction ............................................................................ 407.2.2. Main characteristic ................................................................. 407.2.3. Benefits .................................................................................... 417.2.4. Goods and services in the areas of information

technology and automation ................................................... 41


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8. Antitrust Legislation . .......................................................................... 438.1. Purpose .............................................................................................. 438.2. Infractions ......................................................................................... 438.3. Penalties ............................................................................................. 44

9. Environmental Legislation in Brazil . ................................................ 459.1. The National Environmental Policy ................................................ 459.2. Licensing of activities that currently or potentially

cause pollution .................................................................................. 459.3. Crimes against the environment ..................................................... 46

9.3.1. Crimes against the fauna ....................................................... 469.3.2. Crimes against the flora ......................................................... 489.3.3. Pollution and other environmental crimes ............................ 499.3.4. Crimes against the public order and cultural heritage ......... 499.3.5. Crimes against environmental management ........................ 50

9.4. Quality certificate ............................................................................. 50

10. Consumer Rights . ................................................................................. 5110.1. Introduction ..................................................................................... 51

10.2. Basic consumer rights ............................................................ 5110.3. Quality for goods and services .............................................. 5110.4. Liability for goods and services ............................................. 5110.5. The right of complaint .......................................................... 5210.6. Advertising ............................................................................. 5210.7. Consumer code violations ..................................................... 52

11. Public Works and Services Procurement . ........................................ 5411.1. General criteria ................................................................................. 5411.2. Exemptions from tenders ................................................................ 5511.3. Non-requirement of bid tender ....................................................... 5611.4. Types of procurement processes ..................................................... 5711.5. Administrative process .................................................................... 5811.6. Administrative contracts ................................................................ 5911.7. User rights and obligations ............................................................. 6111.8. On-line bidding process ................................................................... 62

11.8.1. At the Federal Government level ........................................ 62


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12. Financing ............................................................................................. 6412.1. Introduction .................................................................................... 6412.2. BNDES financing for micro, small, and

medium-sized companies ............................................................... 6412.2.1. Classification of companies by size ................................... 6412.2.2. Financeable investments / Items ....................................... 6512.2.3. Lines of financing ............................................................... 65

12.2.3.1. BNDES Automatic ............................................... 6512.2.3.2. FINAME ............................................................... 6612.2.3.3. BNDES-Exim ........................................................ 67

12.3. Other financing .............................................................................. 6812.4. Guarantees ...................................................................................... 6812.5. Applying for financing ................................................................... 68

13. Cultural Incentive Laws . .................................................................... 6913.1. Federal incentives ............................................................................ 69

13.1.1. Benefits ................................................................................ 6913.1.1.1. Agreements for transfer of funds ........................ 6913.1.1.2. Rouanet Law ........................................................ 6913.1.1.3. Audiovisual Law .................................................. 7113.1.1.4. Provision of travel tickets .................................... 7213.1.1.5. Repayable loans ................................................... 7313.1.1.6. Virtuoso scholarships ........................................... 7313.1.1.7. Donation of musical instruments ...................... 74

13.2. How to contribute .......................................................................... 7413.2.1. Individuals ........................................................................... 7413.2.2. Corporate entities ............................................................... 75

14. Annex ........................................................................................ 7614.1. Addresses referred in Chapter 13 ................................................... 76

14.1.1. Departments ....................................................................... 7614.1.2. Regional Offices of the Ministry of Culture ..................... 77

14.2 Additional texts .............................................................................. 7814.2.1 SIMPLES ................................................................................. 78

14.2.1.1. Micro-company ................................................... 7914.2.1.2. Small company .................................................... 79

14.3. Laws ........................................................................................ 8014.4. Convertion table ........................................................................... 159


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1. Foreign Capital 1.1. General considerations

Foreign capital refers to the goods, machinery and equipment that enter Braziland are meant for the production of goods and services, as well as financial ormonetary resources brought to Brazil to be invested in economic activities, aslong as they belong to individuals who live abroad or to companies which havetheir headquarters abroad.

1.2. How to register foreign capital

The company receiving the foreign investment must first register with theData Processing Department of the Central Bank of Brazil, in order to receive apassword which will enable it to electronically declare the direct foreigninvestments. Since September 4, 2000, the Central Bank of Brazil has beenaccepting only those declarations made through the Internet, atwww.bcb.gov.br.

To receive the password, it is necessary to submit the Registration Requestform duly filled in, with the notarized signatures of the company’s legalrepresentatives, together with the documents which attest to the powers ofthose signing them (articles of incorporation, by laws, minutes of the generalshareholders meeting or meeting of quota holders conferring the signing powersand, as the case may be, the power of attorney).

Having completed the procedures above, the person must access the Banco Cen-tral do Brasil, site, under the option “Sisbacen-Data Processing”, item “Access toSisbacen via Internet” and download, then run, the program “PASCW10 – Sisbacenvia VPN”. Using it, the registration of the foreign capital can be processed.After this operation, the person will receive a registration identification number,equipped with which he may go to the Central Bank to complete the foreignexchange operation.

1.3. Remittance of profits

There are no restrictions on the distribution of profits and their subsequentremittance abroad. As of January 1, 1996 profits generated are exempt from


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Federal withholding taxes. Profits remitted must be declared using the sameprogram PASCW10, via Internet. The person will then receive a number whichis to be taken to the Central Bank.

1.4. Reinvesting profits

If the investor opts to reinvest profits rather than sending them abroad, thesemay be registered as foreign capital (as in the case of the initial investment, viaInternet), thus increasing the basis for calculation for future divisions of capi-tal for taxation purposes.

1.5. Repatriation

Foreign capital registered at the Central Bank may at any time be sent back tothe country of origin, no previous authorization being necessary. Capitalrepatriated in an amount greater than the amount registered will be consideredto be a capital gain on the part of the foreign investor and will be subject towithholding tax at the rate of 15%.

In the specific case of repatriation of capital, it is important to observe that theCentral Bank of Brazil usually examines the net worth of the company involved,based on its balance sheet. If the net worth is negative, the Central Bank ofBrazil may consider that there was a dilution of the investment, thus denyingpermission for repatriations in an amount proportional to the negative resultsverified.

1.6. Restrictions on remittances abroad

Remittances of currency abroad may be restricted when there is nocorresponding registration at the Central Bank of Brazil, since the remittanceof profits, the repatriation of capital and the registration of reinvestments areall based on the amounts registered as foreign investment.

Source: Central Bank of brazil


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2. How to Open your Company

2.1. Legal ways to start a business

Individual businessman: One who exercises economic activitiesprofessionally, involving the production and circulation of goods and services.Made up of a single individual who gives his name to the firm, being responsiblefor all the company’s acts. This type of legal entity applies to industrial,commercial and service activities; however, it may not encompass the exerciseof the intellectual, scientific, literary or artistic professions.

Simple partnership (S/S): A Simple partnership is a form of organizationutilized by those partnerships which do not exercise business activities or whoseobject is the exercise of the intellectual, scientific, literary or artistic professions,except if the exercise of the profession does not constitute an element of thecompany, as well as cooperatives. The Simple partnership has its documentationregistered at the Office of the Civil Registry of Legal Entities. In this type ofpartnership the partners are jointly and severally responsible for the company’sdebts, should the company’s assets be insufficient to pay them.

Private limited company (LTDA): This form of organization requires theformation of a company by at least two partners. It is organized in the form ofa Business Partnership, and may be governed, additionally, by the provisionsapplicable to corporations, or, in the case of omission in its bylaws, by the rulesapplicable to Simple Partnerships. A private limited company may engage incommercial, industrial and service activities and has its bylaws registered withthe Board of Trade. Shares represent the participation of each partner in thecompany’s capital, with the partners’ liability limited to the value of theirshares or quotas.

Corporation (S/A): To establish a firm of this kind, at least two stockholders,the partners, are needed, whose responsibility is limited to the issued cost of subscribed or acquired capital. The capital stock of the company is divided inshares, and the firm must necessarily aim at profits. It is always regarded as atrading company, no matter what its objectives are. Before starting this type ofcompany, an economic and financial viability study must be made, in order togain information into the company’s proposed basic structure and the reasonsthat lead to the conclusion that it can be successful. Capital may consist ofcash or assets.

The company may be considered “open” or “closed”, depending on whether ornot the securities it issues are traded on the Stock Exchange or on the over-the-


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counter market. Open-capital public limited companies trade their stock onthe Stock Exchange and the closed-capital ones do it through financialinstitutions. The open-capital company must be registered with the SecuritiesCommission, the federal agency in charge of regulating and auditing such firms.Both types require registration with the local Junta Comercial (board of trade).

Cooperatives: Are constituted in the form of a Simple Partnership by at least20 members who unite, voluntarily, through the creation of a democratic andcollective partnership. They differ from the other types of partnerships inbeing, at the same time, an association of individuals and also a business, inwhich the members themselves are the owners of the company. In order torequest the services of a professional belonging to a cooperative, no matter thearea, the company can make the request directly to the chosen segment.

2.2. How to register a business

2.2.1. Individual businessman

See below the documents and taxes- together with the official entities thatrequest them - which are required of sole proprietors who want to start abusiness. The total cost of the taxes can be obtained directly from the entitiesthat charge them. Most of the required forms to be filled out (including fiscalbooks) can be bought in stationery shops.

Some of the required procedures for opening a business can be found on theInternet. On the site of the Receita Federal (the federal tax-collecting agency)they can download the Programa CNPJ, a program which allows them to fillout several forms electronically.

Step 1

Entity in charge:

Junta Comercial (Board of Trade)

Required documentation and procedures:

- request business-name search by means of the form Pedido de Busca(search request);

- fill out 4 copies of the Formulário de Firma Individual (Sole Proprietorshipform);

- fill out the Requerimento Padrão da Junta (a standard form required by theboard of trade), which is specific for individual businessman (blue cover),


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and the protocolo (a registration document);- fill out the form Comunicação de Enquadramento como Microempresa (a formal

notification that the company is categorized as a micro business) or theform Empresa de Pequeno Porte (small business), submitted in 3 copies(depending on the categorization of the business under the one type or theother);

- fill out 3 copies of the Ficha de Cadastro Modelo 1 (a registry filing card);- two certified copies of the proprietor ’s CPF and RG (personal

identity documents);- proof of address (IPTU of business headquarters - both sides);- proof of payment of taxes (GARE, code 370-0 and DARF, code 6621 - the

amount to be paid can be ascertained from the Junta Comercial).

Step 2

Entity in charge:

Receita Federal (Federal Revenue Service)


- fill out 2 copies of the DBE (Basic Entry Document) to request registrationin the CNPJ (National Registry of Legal Entities), signed by the legalrepresentative of the business (signature must be certified by a notary public). The document is issued automatically by the Programa CNPJ of the FederalRevenue Service;

- fill out the FCPJ (registry file card for legal entities) and the FC(complementary file card for legal entities) on a diskette of the ProgramaCNPJ, a program provided by the Revenue Service;

- In the case of proxy-signed DBEs, enclose copy of proxy document, eithercertified by a notary public or together with the original. In this case, the FCPJ should be filled out with the legal proprietor’s CPF;

- the original or certified copy of the incorporative/deliberative act of theenterprise, duly registered with the proper office, must be presented;

- a certified copy of the partners’ CPF and RG;- a certified copy of the partners’ proof of residence;- a certified copy of the IPTU of the firm’s headquarters;- proof that all partners have filed their income tax declarations with the

Revenue Service and proof that they have done so in the last five years. Incase they are exempt, they should submit a Declaration of Exemption, withtheir signatures certified by a notary public;

- pay tax at a bank, using the DARF form, code 6621.


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Step 3

Entity in charge:

Secretaria da Fazenda (Treasury Office)


- fill out 5 copies of the Declaração Cadastral - DECA (registry declaration);- fill out the Declaração para Codificação de Atividade Econômica - DECAE

(declaration for the codification of the business);- fill out the codification sheet that comes with the DECAE;- bring a certified copy of proprietor’s CIC and RG;- bring all documentation which has been registered with the Junta Comercial

(official board of trade);- bring Fiscal Books Model 1 (Industry) and Model 1A (Commerce);- bring a certified copy of the firm’s IPTU (current year), both sides;- bring a certified copy of the lease/rental contract - which should have been

registered in a notary public office - or proof of property ownership;- firm owner’s proof of residence (original document);- proof of payment of the registration fee by way of the GARE-DR, code 67-

3. Amount due can be ascertained at the Secretary’s Office.

Step 4

Entity in charge:

City Administration Office


- fill out 2 copies of the Guia de Dados Cadastrais (registry-data guide) in orderto obtain the CCM (taxpayers register);

- original and copy of the CNPJ;- original and copy of the registered Company Charter;- a certified copy of the proprietor ’s CPF and RG;- a certified copy of the firm’s IPTU (current year), both sides;- a certified copy of the lease/rental contract, which should have been registered

with a notary public;- Fiscal Books, Models 51 and 57;- fill out the Declaração de Microempresa (a declaration that the firm fits into

the micro-business category), if such is the case;- when the CCM is granted, the City will issue a guide for payment of the

location, installation and operation tax (TLIF);


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- when the documentation above has been secured, the firm should apply forthe “Alvará de Funcionamento” (permit to start the business activity) at theproper City Administration Office.

2.2.2. Simple partnership (S/S)

See below the documents and taxes - together with the respective entities thatrequest them - that are required for opening a Simple Partnership. The taxamount to be paid can be obtained by inquiring at the proper entity office. Most of the required forms (including fiscal books) can be bought at stationeryshops.

Some of the required procedures for opening a business can be found on theInternet. On the site of the Receita Federal (the federal tax-collecting agency)they can download the Programa CNPJ, a program which allows them to fillout several forms electronically.

Step 1

Entity in charge:

Cartório de Registro Civil de Pessoa Jurídica (Notary office for the registry of legalentities)


- choose a name for the firm and request name search. This procedure requirespayment of a tax;

- secure 4 copies of the Company Charter, with all pages initialed by thepartners and witnesses, with signatures certified by a notary public;

- if the activity of the business requires the presence of a skilled professional(a lawyer, for example) the contract must be registered with the “ConselhoRegional da Categoria” (the regional council of the profession in question,such as the OAB -Brazilian Lawyers Organization - in the case of lawyers)before they are registered with notary office for legal entities;

- bring along certified copies of the CPF and RG of the partners;- bring certified copy of partners’ proof or residence;- pay tax charged by the notary public office for going public. Step 2

Entity in charge:

Receita Federal (Federal Revenue Service)


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- fill out two copies of the DBE (Basic Entry Document) to request registrationwith the CNPJ (National Registry for Legal Entities), which must be signedby the legal representative of the enterprise and certified by a notary public. The document is issued automatically by the Programa CNPJ of the FederalRevenue Service;

- fill out the FCPJ (registry file card for legal entities), the QSA (a documentlisting the names of partners or administrators) in case the firm is apartnership, and the FCPJ (registry file card for legal entities) on a disketteof the Programa CNPJ of the Federal Revenue Service; provided by the Fede-ral Revenue Service;

- in the case of proxy-signed DBEs, enclose a copy of the proxy document,either certified by a notary public or together with the original. In this case,the FCPJ must be filled out with the CPF of the person responsible for thefirm;

- partners of foreign nationality or living abroad must present a certified copyor a copy and the original of the proxy document giving power of attorneyto those who will represent them in Brazil. When such a document is issuedabroad, the local Brazilian consulate must certify the legal domicile of thegrantor, and the document must be translated by an official translator;

- bring the original or certified copy of the incorporative/deliberative act ofthe enterprise, duly registered with the proper office;

- bring a certified copy of the CPF and RG of partners;- bring a certified copy of the partners’ proof of residence;- bring a certified copy of the IPTU of the company’s headquarters;- bring proof that all partners have filed their income-tax declarations with

the Revenue Service and proof that they have done so in the last five years. If they are exempt, they must submit a Declaration of Exemption, withtheir signatures certified by notary public;

- pay tax at bank, using the DARF form, code 6621.

Step 3

Entity in charge:

City Administration


- fill out 2 copies of the Guia de Dados Cadastrais (registry-data form), inorder to obtain the CCM (taxpayers register);

- bring original and copy of the CNPJ;


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- bring original and copy of the registered Company Charter;- bring certified copy of the partners’ CPF and RG;- bring certified copy of the firm’s IPTU (tax base year), both sides;- bring certified copy of firm’s headquarters’ lease/rental contract, certified

by a notary public;- bring Fiscal Books, Model 51 and 57;- when the CCM is granted, the City will issue a guide for payment of the

installation, operation and location tax (TLIF);- when the documentation above has been secured, the firm should apply for

the “Alvará de Funcionamento” (permit to start operating) at the proper CityAdministration office.

2.2.3. Private limited company (LTDA)

See, below, the documents and taxes - together with the respective entitiesthat request them - that are required for opening a Private Limited Company.The tax amount can be obtained by inquiring at the proper entity office. Mostof the required forms (including fiscal books) can be bought at stationery shops.

Some of the required procedures may be completed through the Internet. Onthe site of the Receita Federal (the federal tax-collecting agency) they candownload the Programa CNPJ, a program which allows them to fill out severalforms electronically.

Step 1

Entity in charge:



- request business-name search by means of the form Pedido de Busca (searchrequest). This procedure requires payment of a tax;

- 3 copies of the Company Charter, with all pages initialed by the partnersand witnesses plus the signature of a lawyer;

- fill out 2 copies of the Ficha de Cadastro Modelo 1 (registry file card, Model 1),with data on the proposed enterprise;

- fill out 2 copies of the Ficha de Cadastro Modelo 2 (registry file card, Model 2)for each stockholder, manager, delegate and/or proxy;

- fill out the Requerimento Padrão da Junta (the brown-backed standard formrequired by the board of trade) plus the protocolo (registration document);


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- fill out 3 copies of the form Comunicação de Enquadramento como Microempresa(a document that states the firm fits the micro-business category) or Empre-sa de Pequeno Porte (small business), whichever type fits the firm’s category;

- bring along certified copies of the CPF and RG of the partners and of allother persons who filled out the Registry File Card, Model 2;

- bring certified copy of partners’ proof or residence;- bring certified copy of the IPTU of the company’s headquarters;- pay tax at the bank by means of the GARE, code 370-0 and of the DARF,

code 6621. To find out amount to be paid, contact the Junta Comercial (Boardof Trade).

Step 2

Entity in charge:

Receita Federal ( Federal Revenue Service)


- fill out 2 copies of the DBE (Basic Entry Document) to request registrationwith the CNPJ (National Registry for Legal Entities), which must be signedby the legal representative of the enterprise and certified by a notary public.The document is issued automatically by the Programa CNPJ of the FederalRevenue Service;

- fill out FCPJ (registry file card for legal entities), the QSA (a document listingthe names of partners or administrators) and the FCPJ (registry file card forlegal entities) on a diskette of the Programa CNPJ provided by the FederalRevenue Service;




- bring a certified copy of the CPF and RG of the partners;- bring a certified copy of the partners’ proof of residence;- bring a certified copy of the IPTU of the company’s headquarters;- bring proof that all partners have filed their income-tax declarations with


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- pay tax at a bank, using the DARF form, code 6621.

Step 3

Entity in charge:

Secretaria da Fazenda ( Treasury Office)



(declaration for the codification of the type of business);- fill out the codification sheet that comes with the DECAE;- bring Fiscal Book, Model 6;- bring Company Charter duly registered with the Junta Comercial (Board of

Trade), both the original document and a certified copy;- bring the CNPJ (legal-entity registry document), both the original and a

copy;- bring a certified copy of the RG and CPF of the partners;- bring a certified copy of the partners’ proof of residence;- bring a certified copy of the IPTU of firm’s headquarters or the lease/rental

contract certified by a notary public;- secure an “Alvará da Vigilância Sanitária” (permit given out by the public-

health department), when the business activity involves retail of foodproducts;

- secure a permission from Cetesb (Environmental-Sanitation TechnologyCompany), in the case of an industry;

- pay tax at a bank, using the GARE-DR form, code 167-3.

Step 4

Entity in charge:

City Administration




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- bring original and copy of the CNPJ;- bring original and copy of the registered Company Charter;- bring certified copy of the partners’ CPF and RG;- bring certified copy of the firm’s IPTU (tax base year), both sides;- bring certified copy of firm’s headquarters’ lease/rental contract, certified




2.2.4. Corporation (S/A)

See, below, the documents and taxes - together with the respective entitiesthat request them - that are required for opening a Corporation. The tax amountcan be obtained by inquiring at the proper entity office. Most of the requiredforms (including fiscal books) can be bought at stationery shops.

Some of the required procedures may be completed through the Internet. Onthe site of the Receita Federal (the federal tax-collecting agency) they candownload the Programa CNPJ, a program which allows them to fill out severalforms electronically. Step 1

Entity in charge:



- request business-name search by means of the form Pedido de Busca (searchrequest). This procedure requires payment of a tax.

- 3 copies of the Constitution Writing, with all pages initialed by the partnersand witnesses plus the signature of a lawyer and the Statute of the PublicLimited Company;

- fill out 2 copies of the Ficha de Cadastro Modelo 1 (registry file card, Model1), with data on the proposed enterprise;

- fill out 2 copies of the Ficha de Cadastro Modelo 2 (registry file card, Model 2)for each stockholder, manager, delegate and/or proxy;


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- fill out the Requerimento Padrão da Junta (the brown-backed standard formrequired by the board of trade) plus the protocolo (registration document);

- fill out 3 copies of the form Comunicação de Enquadramento como Microempresa(a document that states the firm fits the micro-business category) or Empre-sa de Pequeno Porte (small business), whichever type fits the firm’s category;

- bring along certified copies of the CPF and RG of the partners and of allother persons who filled out the Registry File Card, Model 2;

- bring certified copy of partners’ proof or residence;- bring certified copy of the IPTU of the company’s headquarters;- pay tax at the bank by means of the GARE, code 370-0 and of the DARF,

code 6621. To find out amount to be paid, contact the Junta Comercial(Board of Trade);

Step 2

Entity in charge:



- fill out 2 copies of the DBE (Basic Entry Document) to request registrationwith the CNPJ (National Registry for Legal Entities), which must be signedby the legal representative of the enterprise and certified by a notary public. The document is issued automatically by the Programa CNPJ of the FederalRevenue Service;

- fill out FCPJ (registry file card for legal entities), the QSA (a document listingthe names of partners or administrators) and the FCPJ (registry file card forlegal entities) on a diskette of the Programa CNPJ provided by the FederalRevenue Service;


- in the case of QSA, it must be listed the biggest shareholders with the rightof vote, limited to 12 and also all the directors and administrators;




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- bring a certified copy of the CPF and RG of the partners;- bring a certified copy of the partners’ proof of residence;- bring a certified copy of the IPTU of the company’s headquarters;- bring proof that all partners have filed their income-tax declarations with


- pay tax at a bank, using the DARF form, code 6621. Step 3

Entity in charge:

Secretaria da Fazenda ( Treasury Office)



(declaration for the codification of the type of business);- fill out the codification sheet that comes with the DECAE;- bring Fiscal Book, Model 6;- bring Company Charter duly registered with the Junta Comercial (Board of

Trade), both the original document and a certified copy;- bring the CNPJ (legal-entity registry document), both the original and a

copy;- bring a certified copy of the RG and CPF of the partners;- bring a certified copy of the partners’ proof of residence;- bring a certified copy of the IPTU of firm’s headquarters or the lease/rental

contract certified by a notary public;- secure an “Alvará da Vigilância Sanitária” (permit given out by the public-

health department), when the business activity involves retail of foodproducts;

- secure a permission from Cetesb (Environmental-Sanitation TechnologyCompany), in the case of an industry;

- pay tax at a bank, using the GARE-DR form, code 167-3.

Step 4

Entity in charge:

City Administration


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- bring original and copy of the CNPJ;- bring original and copy of the registered Company Charter;- bring certified copy of the partners’ CPF and RG;- bring certified copy of the firm’s IPTU (tax base year), both sides;- bring certified copy of firm’s headquarters’ lease/rental contract, certified




2.2.5. Cooperatives

Below are the documents and fees – with the respective agencies that requirethem - that are necessary for the opening of a Cooperative. The costs of suchfees for services should be required with the agencies that are responsible forthem. Most of the necessary forms (including fiscal books) can be bought innewsstands.

Some of the procedures for the opening of a company are available on theInternet. On the site of the Receita Federal (the federal tax-collecting agency)they can download the Programa CNPJ, a program which allows them to fillout several forms electronically.

Step 1

Office in Charge:


Necessary documents and procedures:

- request search of the company name through the Request for Search form,- fill in the Brown Cover Form;- take 3 copies of the articles of association;- fill in the Ficha de Cadastro Modelo 1 – two copies- with information on the

cooperative being constituted;


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- fill in Ficha de Cadastro Modelo 2 – two copies- for each member of theadministrative council and/or board;

- take a notorized copy of the identity card of each member of theadministrative council and/or board;

- take a declaration confirming no criminal record, if that is not in the bodyof the minute, for each member of the administrative council and/or board;

- pay the fees in a bank (GARE code 370-0 and DARF code 6621 – request thecosts of such fees at Board of Trade).

Step 2

Office in Charge:



- fill in the Basic Document of Entry (DBE) to request the register in theNational Registry of Legal Entity (CNPJ), two copies, with a notorizedsignature of the Legal Representative of the company (the document isautomatically issued by the Programa CNPJ from the Federal RevenueService);

- fill in the Cadastral Card of Legal Entity (FCPJ) and the ComplementaryCard of Legal Entity (FC), in a floppy disk, through the Programa CNPJ provided by the Federal Revenue Service;

- if the DBE is signed by a proxy, enclose a notarized copy of the power ofattorney or a copy together with the original document. In this case, theFCPJ must be filled in with the CPF (individual tax payer identity card) ofthe one in charge;

- take the original document or a notarized copy of the constitutive/deliberative act of the company, duly registered with the pertinent agency;

- take the minute of the general assembly of the founder members or thepublic deed, registered at the Board of Trade;

- take the statute, except if it has been transcribed in the minute or publicdeed, registered at the Board of Trade.

Step 3

Office in Charge:

Organization of the Cooperatives of the State


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- fill in and take the Petition, Registration Card and Nominative List.

2.3. How to avoid problems when choosing the business location

- Check legality of chosen site with the Realty Register Office;- check whether there are any city property-tax payments overdue;- if renting the property, secure a rental contract and have it registered with

the Civil Registry Office for Legal Entities;- check with the pertinent city administration office whether the chosen site

is sanctioned for the kind of business that is planned for it;- in the case of businesses located in a partner’s own place of residence, note

that specific legislation on such cases rules that: 1) the area occupied by thebusiness should be independent and separated from the area used as residence(annex building, garage, etc.); 2) a written statement must be submitted tothe City avouching that there is no physical link between the business areaand the area used as residence; 3) a drawing or plan showing the businessand residential areas of the place must also be submitte.

2.4. How to obtain the business permit

According to the pertinent legislation, no single piece of property may beoccupied or used for the installation and operation of any industrial, commercialor service activity without a permit given out by the city. To secure the permit,the following documents must be presented:

- a declaration stating that the property is in accordance with the regularitydocument submitted, and that it is in adequate sanitary and habitablecondition;

- IPTU (property-tax document). Property must be sanctioned for commercialuse;

- a copy of the CCM (a register of city-tax payers);- proof of payment of the Location, Installation and Operation Tax (TLIF);- the legal permit to move into the property (“habite-se”);- the following may also be eventually required: approval from the Sanitation

Engineering Department, Operation Permit from Cetesb, an up-to-dateinspection document from the Fire Brigade, security-check documents, permitto install tanks and pumps and personal identity documents (RG and CPF)of all the partners of the business.


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3. Labor Legislation

3.1. Types of contracts

3.1.1. Temporary contracts

Temporary work is that rendered by an individual to a company to meet thetransitory needs of substitution of regular and permanent personnel or due toan extraordinary increase in workload. The time period is determined by theemployer and may only be extended once, for a period of time inferior or equalto the previous one.

Rights of the temporary employee

The following rights are guaranteed to the temporary employee:

- remuneration equivalent to that received by other employees in the samecategory at the employing company, on an hourly basis, the minimum regi-onal wage being guaranteed in any case (R$ 240,00 as of April 1, 2003, whichwill remain in effect for a period of one year);

- a working day of 8 hours with no more than two hours overtime, to be paidwith an additional 20% (twenty per cent) added to the hourly rate;

- proportional vacation time;- paid weekly rest days;- extra pay for night shift;- severance indemnity for dismissal without good cause or at the end of the

term of the contract, corresponding to 1/12 (one twelfth) of the wagesreceived;

- social security protection as provided for in the organic law governing Soci-al Security;

- registration of the work contract as a temporary employee in the employee’semployment booklet (CTPS).

3.1.2. Fixed term contracts

It is a contract which has predetermined starting and ending dates and maylast for a maximum of two years. After the end of a fixed term contract, thecompany must wait 6 months between the end of such a contract and thebeginning of a new fixed term contract with the same employee; otherwise,the contract shall be interpreted as an indefinite term contract.


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Rights of the employee under a fixed term contract

- Provisional Measure dated March 28, 2002, which will remain in effect for aperiod of one year);

- the employee is entitled to a 13th salary at a rate equivalent to 1/12 of hismonthly salary per month worked;

- the right to vacation is the same as for an indefinite term contract. As theseare normally short or medium-term contracts, at termination the employeereceives his vacation proportionally, plus one third;

- provisional stability is ensured to the pregnant employee, the shop steward,as well as his deputy, to employees who participate on the Board of theInternal Committee for the Prevention of Accidents - CIPA and to employeeswho have suffered work-related accidents, when any of these instances occur.Such stability is terminated at the end of the contract term;

- the period of work under a fixed term contract is taken into account forretirement purposes, as provided for in the new labor law. Other socialsecurity rights are also guaranteed;

- the Government Severance Indemnity Fund for Employees - FGTS isdeposited monthly at a rate of 8%.

3.1.3. Indefinite term contracts

This type of contract is the one normally used for hiring employees. It is alsoused when one fixed term contract is signed followed by another one withoutthe required six-month interval.

Rights of the employee under an indefinite term contract

- Minimum wage;- work week of up to 44 hours;- salary many not suffer reduction;- unemployment insurance;- 13th salary;- profit sharing;- paid overtime;- annual vacation;- maternity leave;- paternity leave;- prior notice for termination;- retirement;- labor accident insurance;- Government Severance Indemnity Fund for Employees (FGTS);


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- provisional stability for the Board members of Committees for the Preventionof Accidents, employees who have suffered work-related accidents and forpregnant employees.

3.2. “Bank of hours”

The “bank of hours” is a more flexible system of compensation for overtimework hours, but which demands authorization through collective bargainingagreements, enabling the company to adjust employee working hours to itsproduction needs and service demands, and it encompasses all types of contracts.

It may be used, for instance, at slow times so that the company can reduce thenormal work day during a certain period of time without reducing salaries anda “credit balance of hours” remains set aside to be used when productionimproves or activities pick up, provided this occurs within a period of 120 days,except as otherwise negotiated (in the collective bargaining agreement). If thesystem starts being used during a period of high productivity in the company,the working day is extended (by a maximum of two hours a day) during suchperiod. In this case, overtime will not be paid, but rather offset by acorresponding number of days off. Or, the working day may be reduced untilthe balance of extra hours is entirely offset.

The system may vary depending on the terms of the collective bargainingagreement, but the limit shall always be 10 working hours daily, and in any120-day period, the sum of the weekly hours may not exceeded the maximumallowed by law. For each 120-day period, the compensation system is restarted,with the formation of a new “bank of hours”.

In addition, the offsetting of the overtime worked must occur during the termof the contract, i.e. in the event of termination of the contract (whatever thetype), without the overtime worked having been offset, the employee is entitledto the payment of such hours, plus the additional amount specified in thecollective bargaining agreement for overtime, which in no case may be lessthan 50% of the normal hourly rate.

3.3. Labor and Social Security Charges

INSS (National Institute for Social Security)

Employer: Variable rate, with a maximum of 28,8% of total payroll. Companiesoperating under the SIMPLES.


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Employees: (Rules for all the companies)Discount of:- 7,65% for salaries of up to R$ 468,47- 8,65% for salaries of up to R$ 468,48 untill R$ 600,00- 9,00% for salaries of up to R$ 600,01 untill R$ 780,78- 11,0% for salaries of up to R$ 780,79

Government Severance Indemnity Fund for Employees (FGTS)

Rate of 8% of the monthly remuneration paid to each employee.

Employee’s Profit Participation Program (PIS)

Rate of 0,65% on gross revenues. Companies which have opted for the SIM-PLES system are not subject to the charge.

Union Contribution

Deducted from employees: one day’s wages annually. Trade Association: seerate in progressive table at the respective union headquarters.

Prior Notice

Amount corresponding to one month’s wages.

Vacation Due

Salary for the month in which the employee takes his vacation, to be paid inadvance, plus 1/3 (one third) bonus.

Proportional Vacation Time

1/12 of the employee’s monthly salary for each month worked or fraction thereofgreater than 15 days, to be calculated as of the day of admission to thecompletion of one year, and thus successively.

13th Salary

Amount corresponding to one month’s wages, 50% of which is to be paid byNovember 20 of each year, the remaining 50% to be paid by December 20 of thesame year.


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Proportional 13th Salary

1/12 of the employee’s salary for each month worked or fraction thereof greaterthan 15 days, to be calculated as of January 1 of the corresponding year toDecember 31 of the same year.

Sources: Ministry of Labor and Employment, Social Security and Caixa Econômica Federal.


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4. Foreign Labor

Foreigners who must reside in Brazil for work purposes require an authorizationwhich must be granted by the Ministry of Labor and which is required byBrazilian consular authorities in accordance with the legislation in force.

4.1. Types of Visas

4.1.1. Visa for short- term business travel

Visitors coming to Brazil with a visa for short-term travel may not, under anycircumstances, be paid any type of remuneration. The visa may be obtained atthe Brazilian Consulate in the jurisdiction where the applicant resides, and it isnot required for all countries. The visa application should contain informationregarding the objective of the trip, the names, addresses and telephone numbersof commercial contacts in Brazil, arrival date and probable departure date, anda guarantee of moral and financial responsibility by the applicant during his/her stay in Brazil.

This visa may be valid for a period of up to 90 days from the date of first arrivalin Brazil and may be used for multiple entries into the country during thisperiod. An extension for an additional three months may be obtained throughthe Federal Police if requested before the expiration date.

4.1.2. Temporary work visas

There are various types of visas for individuals coming to Brazil for workpurposes, and the individual must obtain a Work Permit from the Brazilianauthorities. Following approval of the request, the authorization will bepublished in the Federal Official Gazette and the respective consulate will benotified. At this point, the foreign candidate may apply for his visa.

4.1.3. Temporary visas for professionals This type of visa is offered to individuals who come to Brazil for a period of upto two years and may be extended for an additional two years. This visa isavailable to foreigners who will be temporarily employed by a Brazilian companywhich requires know-how not available in Brazil.


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4.1.4. Foreign journalist visa

This is a visa for foreign journalists who are working on a temporary basis in Brazil.In this case, the candidate may not be paid a salary in Brazil.

4.1.5. Permanent working visa

Those who will be transferred permanently to Brazil in order to work for a branchor subsidiary of a foreign company as a director or manager may request a permanentworking visa. In this case, the company must have registered with the Central Banka foreign investment in Brazil of at least US$ 50 * thousand. If a person works inBrazil for a period of four years or more on a temporary basis – regardless of whetherthe company is Brazilian or foreign – he/she may apply for a change in his/herstatus to permanent. The company must make this request to the Ministry of Justice.To obtain a permanent working visa for someone who is not already working inBrazil on a temporary basis, the application to the Ministry of Labor must be filedfirst.

* National Council of Immigration, Resolution Normative n° 60, of October 06, 2004

4.2. Registration on entering Brazil

Foreigners living in Brazil, immigrants and temporary residents who come for workpurposes – except for short-term business trips – must register with the FederalPolice within 30 days of their arrival in Brazil and present their passports.

4.3. Preparatory travel for temporary or permanent work purposes

Those needing to travel to Brazil on business before obtaining a work permit andthe appropriate visa may request a short-term business visa. However, they maynot be paid a salary in Brazil until after the authorization and the visa are obtained.

4.4. Work by spouse and children

Spouses and children accompanying foreigners will come with the same type ofvisa, but will not be able to work in Brazil unless the visa is modified to a permanentresident visa. If the applicant is married to a Brazilian or is the parent of a Brazilianchild, he/she may request a permanent visa at the Brazilian Consulate before comingto Brazil, or at the Ministry of Justice if he/she is already in Brazil. A foreigner whoadopts a Brazilian child also has the right to a permanent visa.


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4.5. Employment booklet for foreigners

The CTPS - Employment Booklet will be supplied to the foreigner uponpresentation of the necessary documents. Those interested in applying for anemployment booklet must appear personally at a Regional Labor Office (DRT),Regional Sub-Office or the service branch closest to their homes.

4.6. Foreign labor in Brazil

4.6.1. Documents required for foreigners having a permanent visa

- One recent photograph measuring 3 cm X 4 cm, white background;- original identity card for foreigners – CIE. The period of validity of the

Employment Booklet (CTPS) will be the same as that of the CIE;- if the CIE is the old type and renewal has been applied for with the Federal

Police, the original receipt from the renewal application plus a notarizedcopy of same must also be presented;

- if the party has no CIE to present, it will be necessary to present the originalreceipt from the application for the CIE with the Federal Police, the resultsof the identification data check performed by the National RegistrationSystem for Foreigners (SINCRE) and the original passport with the respectivevisa granting permanent resident status. In this case, the period of validityof the CTPS will be a maximum of 180 days and may be renewed for thesame period of time.

4.6.2. Documents required for foreigners having temporary work visas

- One recent photograph measuring 3 cm X 4 cm, white background;- original of the Federal Official Gazette (with approval of the petitioner’s

application by the General Coordinator of Immigration);- original passport with the respective visa and registration with the Federal

Police;- original receipt from the Federal Police;- original of the identification check [SINCRE] (issued by the Federal Police)

or visa application duly stamped on the front and back.

Source: Ministry of Labor and Employment


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5. International Contracts of Intellectual Property

5.1. General Aspects

Intellectual property comprises literary, scientific and artistic property, beingsubordinate to the civil laws. On the other hand, industrial property is subjectto commercial laws. The National Institute of Industrial Property (INPI) is agovernmental agency in charge of the rights of the industrial property, as wellas the formal exam of patent applications and concession and the registrationof trademarks.

5.2. Trade Marks

5.2.1. Validity Terms

The validity term of the trademark registration is ten years, as from the date ofconcession. This term can be extended, upon request of the title-holder, forequal or successive periods, otherwise, the registration will be terminated andthe trademark will become, theoretically, available. If the application for anextension has not been made until the final deadline of the registration validity,the title-holder will be able to do it within the six following months as long ashe/she makes an additional payment.

5.2.2. Obligations of the title-holder

The title-holder of a trademark registration has the obligation to use it so as tokeep it in force. The deadline for the beginning of its use is of five years as fromthe registration concession date and the use of the trademark cannot beinterrupted for more than five consecutive years. The registration of a Braziliantrademark may be applied for anyone interested, Brazilian or foreigner. Uponapplication of a trademark registration in Brazil, it is necessary to presentevidence of the legal situation of the title-holder in relation to the laws of his/her country, to give proof of his/her field of business.

5.2.3. Procedures

Firstly, it is advisable to carry out a previous search of the trademark in order toknow if there already exists any mark deposited or registered in the same field.


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The procedure, however, is not compulsory. The application of registration ofthe trademark is made by means of an appropriate form, in which there will beinformation about the trademark and the applicant. In order to carry out thissearch or to make the deposit, the person shall go to the home office of INPI orto one of the branches or Representatives of the agency.

5.3. Patents

Any individual or legal entity may place a patent application or registration orindustrial design, which is valid only within the territorial boundaries of thecountry, which concedes this protection.

Cannot be patented:

- whatever is against the moral and good manners(inventions against religiouscults and to feelings worthy of respect and veneration), to the public order(inventions against the laws and public safety) and to public well-being(inventions with the exclusive aim against health);

- matters related to the transformation of the atomic nucleus (only theequipment, machinery, devices and the like and, eventually extractive pro-cesses, which do not alter or change the physical-chemical properties ofproducts or matters can be patented);

- the whole or part of living beings, except for the transgenic micro-organisms,which fulfil the three requirements to be patented - novelty, inventive activityand industrial application – and which are not a mere discovery.

5.3.1. Previous search

Before placing a patent application, it is advisable, however, not compulsory,to make a search of previous registrations, which might be Individual or Isolated.In order to carry out an Individual search, the interested him/herself shall go tothe home office of the INPI (Praça Mauá, 7, 7th floor, Rio de Janeiro), where thePatent Bank is located. He will be given the deadline of three days in order tomake the search and the information found shall be short-listed in theDescriptive report of the Patent Application. In case the person cannot makethe search personally, he/she may choose the Isolated Search, which will bemade by the INPI itself and charged according to the quantity of documentsresearched. More information will be obtained in the INPI web site in the itemProducts and Services of Technological Information.


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5.3.2. Validity Term

An invention patent lasts for a period of 20 years and the one referring to theusefulness model, for a period of 15 years, as from the deposit date. Theregistration of industrial design lasts for a period of 10 years as from the depositdate, renewable for three successive applications of five years each until theachievement of the maximum period of 25 years.

5.3.3. Obligations of the title-holder

In order to keep the patent, the title-holder shall pay the annual fees,quinquennium and extensions and start to explore the patented object — withinthree years from the date of its concession — and not to interrupt the use ofthe product for more than a year.

5.3.4. Procedures

In order to protect an invention, one shall go first to the National Institute ofIndustrial Property (INPI), where an application shall be made, which afterbeing analysed by a patent analyst might become a Patent or Registration,with validity in all national territory. The application shall be made with thefollowing documents: own application, descriptive report, claims, drawingsand summary. The INPI will require three copies of the application, and theuser shall keep one to himself/herself. They shall be preceded of a special formand of a payment slip, which shall be paid at an authorised bank. The formsare distributed at the front desk of INPI or in one of the branches orRepresentatives, and in the INPI web site . At the front desk, the person willreceive a receipt of delivery and shall return to follow the application copy,which can also be made by the telephones (0**21) 206-3314 and (0**21) 206-3592 or through e-mail [email protected].

5.3.5. The patent application

The INPI issued several Normative Acts regulating how to make the Patentapplications. They can be acquired personally or from the web site , inLegislation. For the correct filling of the documents, which are part of the Patentapplication, certain procedures shall not be forgotten. Information about simi-lar processes, and the existence of previous applications (Brazilian or not) mustbe mentioned in the Descriptive Report, as well as all the details, which arenecessary to enable a technician in the area to reproduce the object. TheDescriptive Report must begin with the application title and mention thematerials involved and ways of utilising the product. All the references to thedrawings shall also be there.


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The application object needs to be described in the Claims Chart, which shallbe started with the title — or by part of it chosen to describe the invention —and display the phrase “characterised by” followed by the technicalcharacteristics of the model, mainly those which do not exist in previousregistrations.

The Summary shall have 50 to 200 words and describe the object. In case ofdoubt, it is possible to contact the Patent Board of Directors and obtain technicalguidance through the telephones (0**21) 206-3797 and (0**21) 206-3313, atthe INPI home office, Praça Mauá, 7, Rio de Janeiro, in room 1017 or throughthe e-mail: [email protected].

5.4. Contracts of technology transfer

It is important for the contracts of technology transfer to specify their objects,the industrial property rights involved and the way the transfer will be made.The contracts of commercial exploitation — which should not exceed thevalidity of the trademark or patent registration — shall say if the licensing orcommercial exploitation are of an exclusive nature or if sub-contraction isallowed.

The contracts of technical and scientific assistance shall specify the number ofspecialists who will be necessary for the fulfilment of the services, theprogramme, payment and the time required.

The approval application shall be handed in to the National Institute of Indus-trial Property (INPI) in an adequate form, together with the original contractor equivalent document. The INPI might also ask for some additional documentsand in this case the interested has 12 months to attach them, otherwise theprocess is filed.

5.5. Franchising

The Franchising Brazilian Association (ABF), which is responsible for overseeingthe ethical activity in Brazil, organised a code of franchising self-regulation,which offers support and rules for its implementation. Besides the law 8955/94 regulates the relations between franchiser and franchisee, since the initialidea until the establishment of the franchise.

The franchise registration is not compulsory for any governmental institution


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so that it can be valid and that it may be executed, although in order to be validagainst third parties, the registration at the National Institute of IndustrialProperty (INPI) is required. If the franchisee is a foreigner, he must register atthe Central Bank of Brazil, with the purpose of allowing the paymentsremittance foreseen in the contract.

Sources: National Institute of Industrial Property (INPI) and Franchising Brazilian Association (ABF).


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6. Economic Indicators for Brazil

6.1. Gross Domestic Product (GDP)*

Year In R$ Million Variation (%)*1996 778.887 2,661997 870.743 3,271998 914.188 0,131999 963.869 0,812000 1.086.700 4,362001 1.184.769 1,512002 — 1,52

Source: Brazilian Institute of Geography and Statistics - New National Accounts System (IBGE/NSCN)

* GDP – actual variation (discounting inflation for the period)

6.2. Inflation rates*

Year Rate1997 5,22%1998 1,65%1999 8,94%2000 5,97%2001 7,67%2002 12,53%

* IPCA (Amplified Consumer Price Index) calculated by the Brazilian Instituteof Geography and Statistics - IBGE.

6.3. Interest rates*

Year Rate1997 39,87%1998 29,21%1999 18,99%2000 16,38%2001 19,05%2002 24,90%

Source: Central Bank of Brazil, Monetary Policy Committee

* Daily average interest rate, annualized on a 252 working-day basis. Position as of 31 December of each year.


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6.4. Exchange rates*

Year Commercial Dollar*1997 R$ 1,0808

1998 R$ 1,1644

1999 R$ 1,8514

2000 R$ 1,8295

2001 R$ 2,3522

2002 R$ 2,9309

Source: Central Bank of Brazil

* Annual average of actual parity real/commercial dollar.

6.5. Direct foreign investment in Brazil

Year Flow (in Us$ Million)1997 17,879.00

1998 26,346.00

1999 31,214.00

2000 33,331.00

2001 24,715.00

2002 14,084.00

Source: Central Bank of Brazil, Department of Foreign Capital.


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7. The Information Technology Industry

7.1. Introduction

The intention of Brazilian legislation governing information technology is toinstitutionalize standards for ratifying and certifying the quality of goods andservices, as well as to stimulate international cooperation. One of the principallaws governing the matter is Law 7232, published in October of 1984, whichcreated the National Council of Information Technology and Automation -Conin, and the Special Secretariat for Information Technology - SEI, which areresponsible, respectively, for the National Information Technology andAutomation Plan and for the prior approval and registration of informationtechnology products produced and sold in the Brazilian market. The InformationTechnology Center Foundation, CTI was also created in order to offertechnological support to Brazilian industry.

Law 9609 promulgated in 1998, also known as the “Software Law”, containsthe principal rules for the protection of intellectual property contained incomputer programs. The copyright system, regulated by Law 9610 of 1998,establishes the property and moral rights granted to the creators of software.

7.1.1 . Taxes

Computer programs sold in Brazil are subject to the Value-added Tax on Salesand Services (ICMS), whose tax basis is the value of the magnetic media(diskettes, CD-ROMs, magnetic tapes, etc.) and the rate is 18%. When foreigncomputer programs arrive at Customs, they are subject to Import Duty (II), ata rate of 7,99%, Value-added Tax on Sales and Services (ICMS), at a rate of 18%and Excise Tax (IPI), whose rate depends on the type of product, as defined inthe Table of Excise Tax Incidence (TIPI), which may be consulted at the FederalRevenue Service.* Income tax withholding is at the rate of 15% for anyaddressee country.

* The Table of Excise Tax Incidence (TIPI) may be consulted in person at theFederal Revenue Service at the following address: Av. Prestes Maia, 733, Luz,São Paulo. For more information, call (0**11) 3315-2401.

7.1.2. Registration of software

The rights of one who develops a computer program and proves his/herauthorship extend for 50 years as of the 1st of January of the year following its


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creation. Registration made in Brazil is accepted in any international treatycountry, and when a product is registered, its trade name is automaticallyprotected.

The first step in registering software is to acquire the Users Manual, whichcontains all the information necessary to do so. The manual may be found atthe National Institute of Industrial Property (INPI) or at its agencies and staterepresentative offices. If preferred, the information may be downloaded viathe Internet from the INPI site.

The company must then contact the National Institute of Industrial Property(INPI) to obtain the value of fees to be deposited for the registration and receivethe Fee Payment Form to be paid at the Bank of Brazil. Following payment, aform will be issued for the registration request, which should be delivered,together with the documents, directly to the INPI or sent by mail in tamperproofpackaging.

The elapsed time between the filing of the Registration Request and the issueof the Certificate is 90 days. However, a registration number will be given atthe time of filing to be used in any communications regarding the program.

7.2. The New Information Technology Law

7.2.1. Introduction

Under the new information technology law, companies wishing to establishthemselves in the state of São Paulo will continue to enjoy the same benefits asbefore. Law 10176, enacted January 11, 2001, alters Law 8248, Law 8387 andDecree-Law 288 and makes provisions regarding qualifications and competitionin the information technology sector. Incentives for the State were threatened,based on the argument that it was only for this reason that companies weresetting up here. However, fiscal incentives are only one of the factors thatattract investment. The skilled labor, logistics and infrastructure offered are afew of the many factors that contribute to the attraction of foreign investment.

7.2.2. Main characteristic

The main characteristic of the new law is a reduction in the IPI (Excise) Tax toremain in force from January 1, 2001 to December 31, 2009, when the incenti-ves will cease to exist. The law provides for:


41

- a reduction of ninety-five percent of the tax due, from January 1 to December31, 2001;

- a reduction of ninety percent of the tax due, from January 1 to December31, 2002;

- a reduction of eighty-five of the tax due, from January 1 to December 31,2003;

- a reduction of eighty percent of the tax due, from January 1 to December31, 2004;

- a reduction of seventy-five percent of the tax due, from January 1 toDecember 31, 2005;

- a reduction of seventy percent of the tax due, from January 1, 2006 toDecember 31, 2009, when the incentives will cease to exist.

7.2.3. Benefits

To be eligible for the benefits, companies must invest a minimum of 5% oftheir gross revenues annually in research and development activities in the areaof information technology, which must be carried out in Brazil. Under thelaw, at least 2.3% of gross revenues must be invested as follows:

- under agreements with research centers or institutes or official or recognizedBrazilian educational entities;

- under agreements with research centers or institutes or official or recognizedBrazilian educational entities having their head office or main establishmentlocated in the Sudam (Superintendency for the Development of the Amazon)or Sudene (Superintendency for the Development of the Northeast)designated areas or the Central Western region of the country, except forthe Manaus Free Trade Zone;

- in the form of funds to be deposited quarterly in the FNDCT – NationalScientific and Technological Development Fund.

7.2.4. Goods and services in the areas of information technologyand automation

For the purposes of the law, the following are considered goods and services inthe area of information technology and automation:

- electronic components and semiconductors, opto-electronics, as well as therespective electronic parts from which they are made;

- machines, equipment and devices based on digital technology which functionin the collection, processing, structuring, storage, switching, transmission,


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retrieval or presentation of information, the respective electronic parts fromwhich they are made and the physical support to operations;

- programs for computers, machines, equipment and devices for processinginformation and their respective technical documentation (software);

- technical services associated with the goods and services described above.

Source: National Institute of Industrial Property (INPI)


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8. Antitrust Legislation

8.1. Purpose

Antitrust legislation aims at restraining the monopolistic action of certaincompanies, in accordance with Law 8884, edited June 11, 1994. The law makesprovisions regarding the prevention and repression of infractions against theeconomic order, free competition, the social function of property, consumerrights and the repression of abuse of economic power.

With the promulgation of this law, the Administrative Council for EconomicDefense (CADE) Conselho Administrativo de Defesa Econômica (CADE) which islinked to the Ministry of Justice (Ministério da Justiça), began to exercise itspowers of administrative policing, which extend also to acts that take placeabroad but produce effects in Brazil, or to foreign companies which have arepresentative in Brazil. Thus, acts that may in any way limit or damage freecompetition or which may result in the domination of the market for goodsand services should be submitted for evaluation by CADE.

This organization is aided by the SDE - Economic Law Department of theMinistry of Justice Secretaria do Direito Econômico do Ministério da Justiça (SDE)which permanently monitors the activities and commercial practices ofindividuals or legal entities in order to prevent infractions against the economicorder and may also solicit information and documents whenever deemednecessary.

8.2. Infractions

The following acts are considered infractions against the economic order:

- to limit, falsify, or damage free competition or free enterprise in any way;- to dominate an important market for goods and services;- to arbitrarily increase profits;- to utilize a dominant position in an abusive manner.

Thus, the following acts, among others, shall be considered contrary to thelegal system in force: price fixing among competitors (cartels); the dividing upof markets; limiting or preventing the access of new companies to the market;sales at prices below cost for the purpose of eliminating competitors or acquiringlarger shares of the market (dumping); the stockpiling of goods; and the chargingof excessive prices.


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8.3. Penalties

The commission of infractions against the economic order subjects thoseresponsible to the following penalties:

- in the case of a company, a fine varying from one to thirty per cent of theamount of gross revenues for the previous fiscal year, excluding taxes, butthis amount shall never be less than the amount of the advantage enjoyed;

- in the case of a manager directly or indirectly responsible for the infractioncommitted by a company, a fine varying from ten to fifty per cent of theamount of the fine applicable to the company, for which fine the manager isexclusively and personally liable;

- in the case of other individuals or legal entities that do not perform a businessactivity such that it is not possible to use the criteria of the gross revenuefigure, the fine will vary from six thousand to six million Fiscal ReferenceUnits (UFIRs);

- in the case of recurrence, the fines will be charged in double.

Source: Ministry of Justice


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9. Environmental Legislation in Brazil 9.1. The National Environmental Policy

The main Federal law governing the matter is Law 6938, published in August1981. The objective of the national environmental policy is the preservation,improvement and recuperation of environmental quality, based on the followingprinciples:

- that the environment is a public heritage intended for collective use whichmust necessarily be protected and guaranteed;

- sustainable use of ground, underground, water, and air resources;- planning and supervision of the use of natural resources;- protection of ecosystems, with the preservation of representative areas;- control and zoning of activities which currently or potentially cause

pollution;- incentives for study and research into technologies aimed at the sustainable

use and protection of environmental resources;- monitoring of environmental quality;- recuperation of deteriorated areas;- protection of areas threatened by deterioration;- environmental education at all teaching levels, including community

education, in order to prepare the community to actively participate inenvironmental protection.

9.2. Licensing of activities that currently or potentially causepollution

Licensing by the state environmental agency is required for the construction,installation, expansion and functioning of any establishment that usesenvironmental resources, or is considered to currently or potentially causepollution. In some cases, the licensing process must be analyzed by the Federalenvironmental agency Ibama, the Brazilian Institute for the Environment andRenewable Natural Resources - Instituto Brasileiro para o Meio Ambiente e Recur-sos Naturais Renováveis, Ibama

For these same projects or activities considered to currently or potentially cau-se pollution, it is also required that an Environmental Impact Study (EIA) becarried out, including the respective Environmental Impact Report (RIMA).The following licenses must be obtained for such activities:


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- Preliminary License (LP) - during the preliminary phase of the project,containing the basic requirements to be met during the localization,installation and operational phases;

- Installation License (LI) - authorizing the beginning of implementation ofthe undertaking;

- Operating License (LO) - authorizing the beginning of licensed activity andthe functioning of pollution control equipment.

9.3. Crimes against the environment

Law 9605, published in February 1998, establishes a series of administrativeinfractions and crimes against the environment as well as their correspondingsanctions. In the case of infringement, environmental authorities shall takethe following measures:

- animals shall be set free in their natural habitat or donated to zoos,foundations or similar entities, so long as they remain under the responsibilityof qualified technical personnel;

- if perishable products or timber are involved, they shall be evaluated anddonated to scientific institutions, hospitals, prisons or charitableorganizations;

- nonperishable animal products and byproducts shall be destroyed or donatedto scientific, cultural or educational institutions;

- the instruments used to commit the infraction shall be sold, guaranteeingtheir de-characterization by recycling.

The following are some of the crimes provided for and their respective penalties:

9.3.1. Crimes against the fauna

- To kill, pursue, hunt, catch, or use any species of wildlife, whether native orfollowing migratory routes, without the proper permission, license orauthorization from the proper authority, or in divergence with the type oflicense obtained.

Penalty - detention of six months to one year, plus fine. The following are subject to the same penalties:


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I - whoever obstructs the reproduction of fauna without the appropriatelicense or authorization, or in divergence with the type of license obtained;

II - whoever modifies, damages or destroys nests, refuges or natural breedingareas;

III - whoever sells, offers for sale, exports or acquires, keeps in captivity or instorage areas, uses or transports eggs, larvae or any species of wildlife,whether native or following migratory routes, as well as products orobjects derived from them, originating from an unlicensed breeding areaor one without the proper permission, license or authorization from theproper authorities.

The penalty is increased by half if the crime is committed:

I - against rare species or those considered endangered, even if only at thesite of the infraction;

II - outside the hunting season;III - during the night;IV - in abuse of the license granted;V - within a conservation area;VI - by using methods or instruments capable of causing mass destruction.

The penalty may be increased up to three times if the crime occurs as a resultof professional hunting activities. The provisions of this article do not apply tofishing.

- To export unfinished skins and hides of amphibians and reptiles withoutthe authorization of the proper environmental authorities.

Penalty - detention of one to three years plus fine.

- To introduce an animal species into the country without the proper officialtechnical approval report and license issued by the proper authorities.

Penalty - detention of three months to one year plus fine.

- To practice abuse, mistreatment, injury or mutilation of wild, domestic ordomesticated animals, whether native or exotic.


- To cause, by effluent emission or by materials drift, the death of aquaticfauna species existing in rivers, lakes, dams, lagoons, bays or in Brazilianterritorial waters.


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Penalty - detention of one to three years, or fine, or both.

- To fish during periods in which fishing is prohibited or in locations whereprohibited by the appropriate agency.


- Fishing with the use of:I - explosives or other substances which in contact with the water produce

a similar effect;II - substâncias toxic substances or other means prohibited by the proper

authorities.

Penalty - detention of one to five years.

9.3.2. Crimes against the flora

- To destroy or damage forests designated as permanent preservation areas,even if still in the formative stage, or use them in such a way as to infringeprotection rules.

Penalty - detention of one to three years or fine, or both.

- To cut trees in forests designated as permanent preservation areas withoutpermission from the proper authorities.


- To cause a fire in woodlands or forests.

Penalty - detention of two to four years plus fine.

- To manufacture, sell, transport or release fire balloons that could cause firesin forestlands and other types of vegetation, or in urban areas or in any typeof human settlement.

Penalty – detention of one to three years, or fine, or both.

- To extract stones, sand, lime or any type of mineral from publicly ownedforests or those designated as permanent preservation areas, without priorauthorization.


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Penalty - detention of six months to one year plus fine.

- To cut down or transform into charcoal any species of hardwood, as definedby Executive Act, for industrial or energy purposes or for any other type ofexploitation, economic or otherwise, in divergence with legal determinations.

Penalty - detention of one to two years plus fine.

9.3.3. Pollution and other environmental crimes

- To cause pollution of any type to such an extent that it results or may resultin damage to human health, or that causes the death of animals or significantdestruction of the flora.

Penalty - detention of one to four years, plus fine.

- To carry out prospecting, mining or extraction of mineral resources withoutthe proper authorization, permission, concession or license or that is indivergence with the type of authorization granted.

Penalty - detention of six months to one year, plus fine.

- To produce, process, package, import, export, trade, supply, transport, store,keep, warehouse or use products or substances that are toxic, dangerous orharmful to human health or to the environment, contrary to therequirements established in law or regulations.

Penalty - detention of one to four years, plus fine.

- To disseminate any disease or pest or species which may cause damage toagriculture, cattle raising, the fauna, the flora, or to ecosystems.

Penalty - detention of one to four years plus fine.

9.3.4. Crimes against the public order and cultural heritage

- To destroy, make useless or cause the deterioration of:I - assets especially protected by law, administrative act or judicial

decision;II - files, records, museums, libraries, art collections, scientific facilities,

or the like protected by law, administrative act or judicial decision.


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- To paint, graffiti or by any other means vandalize urban buildings ormonuments.


9.3.5. Crimes against environmental management

- To make false or misleading statements to a Government employee, omitthe truth, or withhold information or technical and scientific data inenvironmental authorization or licensing proceedings.


9.4. Quality Certificate

Since 1996, approximately two hundred ISO 14001 certificates have been issuedin Brazil, according to certifiers accredited by INMETRO, the National Instituteof Metrology, Standardization and Quality - Instituto Nacional de Metrologia,Normatização e Qualidade (Inmetro). In the past, mostly large companies wereinterested in obtaining this certification, but recently smaller companies whichare suppliers to larger companies have also begun to seek ISO 14001 certification,precisely because the larger companies are beginning to require that theirsuppliers - mostly small companies - comply with the environmental rulesdefined by ISO 14001. The objective is to bring the entire productive chain intocompliance, from the raw material through the finished product. To implementthe process, certifiers must monitor whether required commitments are beingmet. In the case of noncompliance, the ISO certification may be suspended.

Sources: Brazilian Institute for the Environment and Renewable Natural Resources; and National Instituteof Metrology, Standartization and Quality.


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10. Consumer Rights 10.1. Introduction

The Brazilian Consumer Protection Code establishes the relationship betweencustomers/consumers and industry, trade, service renderers and other agentssuch as importers, and is regulated by Law No. 8078 dated March 12, 1991.The entity that defends and provides orientation to consumers regarding theCode is the Brazilian Consumer Protection Institute - Instituto Brasileiro de De-fesa do Consumidor (Idec), a non-governmental and non-profit organization.

Brazilian Law establishes the necessary procedures from the pre-manufacturingphase through placement of a product on the market, as well as the advertisinginvolved.

10.2. Basic consumer rights

According to law, basic consumer rights include the protection of life, health,and safety against risks caused by practices employed in the supply of goodsand services considered hazardous or harmful, the provision of appropriate andclear information regarding goods and services, with correct specification ofquantities, characteristics, composition, quality and price, as well as the risksthey entail, and also protection against misleading and abusive advertising,among other items.

10.3. Quality of goods and services

Goods and services placed on the market should cause no risk to consumers’health and safety, and it is mandatory for suppliers to provide any informationthe customer desires. Industrialized products must be sold with userinstructions.

Suppliers may not place on the market goods or services which are hazardousor harmful to the customer’s health or safety. In the event that a productwhich is already on the market is found to represent any type of risk, thesupplier must communicate the fact to consumers immediately through publicannouncements in the press, on the radio and on television.

10.4. Liability for goods and services

Manufacturers, producers, builders, whether Brazilian or foreign, and importersare liable for the reparation of damages caused to consumers by defects resulting


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from the design, manufacture, assembly, formulas, handling and making up,presentation, or packaging of their products, whether they are directly to blameor not, as well as for insufficient or inadequate information on the use andhazards of the product.

10.5. The Right of complaint

The right of complaint is valid for up to 30 days in the case of non-durablegoods or services and for 90 days in the case of durable goods. The complaintperiod begins upon delivery of the goods or termination of the performance ofservices.

10.6. Advertising

Advertising must be done in such a way as to be easily identifiable by thecustomer. The supplier must provide adequate information regarding goods orservices in its advertising and must be prepared to deliver any additionalinformation required by the customer. Misleading or abusive advertising isforbidden.

* Misleading: Misleading advertising is any type of advertising informationor communication which is entirely or partially false, or that which in anyway, including omission, is capable of inducing the consumer to error regardingthe nature, characteristics, quality, quantity, properties, origin, price or anyother information pertaining to goods and services. The omission of essentialinformation regarding the goods or services is also considered misleading.

* Abusive: Advertising is considered abusive when it reflects any type ofdiscrimination, encourages or stimulates violence, exploits fear or superstition,or when it takes advantage of the lack of judgment and experience of children,disrespects environmental considerations or could induce the consumer tobehavior that is harmful or hazardous to his/her health and safety.

10.7. Consumer code violations

Following are some examples of consumer code violations and their respectivepenalties:

- omitting conspicuous wording or symbols warning of the dangers or hazardsof products from their packaging, labels, containers or advertising, as wellas failing to warn of the hazards relating to a service to be rendered bymeans of highly visible written recommendations.


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Penalty - Detention of six months to two years plus fine.

- Failing to advise the proper authorities and consumers of the dangers orhazards of products which become known after the products are on themarket, as well as failing to recall dangerous or hazardous productsimmediately when ordered to do so by the proper authorities.

Penalty - Detention of six months to two years plus fine.

- Performing highly dangerous services contrary to the orders of the properauthorities:

Penalty – Detention of six months to two years plus fine.

- Making false or misleading statements or omitting relevant informationregarding the nature, characteristics, quality, quantity, safety, performance,durability, price or warranty of goods or services. Sponsors of same are subjectto the same penalty.

Penalty – Detention of three months to one year plus fine.

- Creating or displaying advertising known, or which should be known, to bemisleading or abusive.


- Employing used parts or components for the repair of products without theauthorization of the consumer.


- Denying or hampering consumer access to information regarding him/herselfthat is contained in customer files, data bases, records and registers.

Penalty – Detention of six months to one year or fine.

- Failing to deliver to the consumer a properly filled out warranty statementwith a precise specification of its content.

Penalty – Detention of one to six months or fine.

Source: Brazilian Consumer Protection Institute


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11. Public Works and Services Procurement

11.1. General criteria

Works and services including publicity, purchasing, transfer of assets,concessions, permissions, and Government rentals, when contracted with thirdparties, must be contracted by means of a public tender. Every part of theprocess must conform to the principles of equality, legality, impersonality,morality, publicity, administrative probity, objective judgment and selection ofthe proposal most advantageous to the government. All other factors beingequal, first preference will be given to products or services produced or renderedby 100% Brazilian companies, and second preference to those produced orrendered in Brazil by mixed capital Brazilian companies.

The concession of public utility services is basically the delegation of therendering of a public service to a legal entity or consortium of companies whohave demonstrated their technical capacity to perform it, by means of a formalpublic contract, entered into following a competitive bidding process. Somepublic services are restricted to the Federal Government. Therefore, the followingservices may not be the object of concession or permission: maritime transport,extraction from petroleum or natural gas reserves, refining of Brazilianpetroleum, extraction of nuclear ores and minerals.

According to the Federal Constitution, only the Federal Government mayprovide, either directly or by means of concessions granted to companies whoseshareholding is State controlled, such services as power generation, transmissionand distribution, transports, basic sanitation, urban waste removal and cleaning,operation of ports, highway construction, airport and aerospace infrastructure,telephone and telegraphic communications, data transmission and other publictelecommunications services, and the rendering of informational services byprivately held entities using the Government-operated publictelecommunications network is guaranteed.

Public Tenders for works and services may only be opened when: - there is a basic project approved by the proper authorities and available for

examination by those interested in participating in the public bidding process;- there is a detailed budget contained in spreadsheets that shows the

composition of all unitary costs;- there is a budget forecast for financial resources to ensure the payment of all

obligations resulting from the works or services to be performed or providedduring the fiscal year in progress, in accordance with the respective timetable.


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The following may not participate, either directly or indirectly, in the tender,execution of works or supply of goods needed for same:

- the author of the basic or executive project, whether an individual or a legalentity;

- the company that is, individually or as part of a consortium, responsible fordrawing up the basic or executive project, or of which the author of theproject is a director, manager, shareholder or holder of more than 5% of thevoting capital or its majority shareholder, technical person responsible orsub-contractee;

- employee or director of the organ or entity doing the hiring or responsiblefor the tender.

It is only allowed participation of the author of the project or the company asa consultant or technical advisor, in a monitoring, supervisory or managementcapacity to the Government body exclusively.

The specific Law which regulates the subject matter of bid tenders andadministrative contracts is Federal Law 8666, dated June 21, 1993.

Public service concessions and permissions are governed by Federal Law 8987,dated February 13, 1995.

11.2. Exemptions from tenders

Tenders may be dispensed with in the following situations, as provided for inFederal Law 8666:

- works, services and purchases involving minimum amounts as indicated inlaw;

- wars, serious disturbances of the peace, public emergencies or calamities;- when there were no interested bidders in the previous public tender;- when the Federal Government must intervene in the economic sphere in

order to regulate prices or normalize the supply situation;- when the bids tendered offer prices that are higher than those practiced in

the domestic market or are incompatible with those set by the properauthorities;

- when the operation involves only domestic public corporations, except ifthere are private or mixed-capital companies that can render or provide thesame goods or services, in which case they shall be subject to a public ten-der;

- when there exists a possibility of compromising national security;


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- for the purchase or rental of real estate for government use, where choice isconditioned upon installation needs and location, so long as the price iscompatible with market value, as established through prior appraisal;

- in the contracting for the unfinished portion of works, services or supply asa consequence of contractual termination, provided that the classificationorder of of the previous public tender is abided by and provided that thesame conditions offered by the winning bidder are accepted, including theprice, appropriately updated;

- in the eventual purchase of perishable foodstuffs, at a supply center or simi-lar facility, carried out directly and based on the price for the particular day;

- in the contracting of a national nonprofit institution responsible for research,teaching or institutional, scientific or technological development;

- for the acquisition of goods or services through an international organization,provided that Brazil is a member, and in keeping with the terms of a specificagreement and when the conditions offered are advantageous to theGovernment;

- for the acquisition or restoration of works of arts and historical objects ofcertified authenticity.

11.3. Non-requirement of bid tender

A bid tender is not required when competition is unfeasible, as provided for inFederal Law 8666/93:

- for the acquisition of materials, equipment or goods which can only besupplied by an exclusive producer, company or commercial representative,brand preferences being prohibited; and proof of exclusivity must beevidenced by a declaration provided by the board of trade of the place wherethe bid tender would be held or the construction work or service providedby the Employees Union, Federation or Confederation of Employers, or byequivalent bodies;

- for the hiring of technical services of a singular nature, with professionals orcompanies that are notoriously specialized, non-requirement of a bid tenderbeing prohibited in the case of advertising or publicity services. In this case,a notoriously specialized professional or company is considered to be onewhose reputation in his/her/its field of specialization, resulting from priorperformance, studies, experience, publications, organization, equipment,technical personnel or other requirements relating to its activities makes itpossible to infer that his/her/its work is essentially and unarguably the mostappropriate for the full satisfaction of the object of the contract;

- for the hiring of a professional from any artistic sector, whether directly orthrough an exclusive agent, whose celebrity is acclaimed by duly qualifiedcritics or by public opinion.


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11.4. Types of procurement processes

The types of procurement processes include competitive bidding, requests forquotation, invitations to tender, contests, auctions and trading session. Thefollowing are the definitions of these procurement processes as defined by Fe-deral Law 8666, enacted in 1993.

Competitive bidding is the process occurring among any interested companieswhich in the preliminary phase have proven their ability to meet the minimumrequired qualifications listed in the bidding notice for the contract.

Request for Quotation is the process occurring among the interested partiesofficially registered or which meet all the requirements for registration by thethird day prior to the date for receiving quotations, provided they are dulyqualified. The SICAF is the roster of vendors issued by the Federal Government.Other information on obtaining a copy of the SICAF can be obtained on thesite www.comprasnet.com.br.

Invitation to Tender is the process occurring among interested partiesbelonging to the pertinent sector, whether officially registered or not, a minimumof three being chosen and invited to bid by the contracting body, which willaffix a copy of the bidding announcement in an appropriate place, extendingthe bidding to any others registered in the corresponding specialty who manifesttheir interest up to 24 hours before the proposals are presented.

Contest is the process occurring among any interested parties for the selectionof a technical, scientific or artistic work, with the awarding of a prize orremuneration to the winners, in accordance with the criteria and generalconditions contained in an official announcement to be published in theBrazilian official press at least 45 days before the contest.

Auction is the process occurring among any interested parties for the sale ofany type of real estate and other goods that are of no use to the Government orproducts it has legally seized or attached, for the best offer equal to or exceedingthe assessed value (minimum price).

The Trading Floor is a type of tender used for the acquisition of goods and therendering of ordinary services (goods whose standards of performance andquality can be objectively described in a bidding notice, using the usual marketspecifications), no matter what the estimated value of the contract. The TradingFloor is used only by the Federal Union, with the exception of the State of SãoPaulo, which has adopted a specific regulation for it. Information on this typeof tender can be found on the site www.pregao.sp.gov.br.


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Types of bid tender:

Lowest price, best technique, technique and price, or highest bid or offer.

11.5. Administrative process

The opening of an administrative process, officially filed, registered andnumbered, is the first procedure in a public tender. In this process are registeredthe specific authorization, the purpose and own resources earmarked forexpenses. Later the following will also be attached: the notice or invitation,copies of the published notices, the original proposal and documents, minutes,reports, technical or legal opinions concerning the bidding and the contract orsimilar instrument. Solely in the case of the trading floor mode, there is aninversion of the order of opening of the envelopes, the envelopes with priceproposals being opened first and then the envelope with the qualifications ofthe winner.

Challenge to an Invitation to Bid: The public administration may not failto comply with the standards and conditions imposed by the law governingbid tenders, to which it is strictly bound. Every citizen has a legitimate right tochallenge an invitation to bid for irregularities in the application of the law,and should submit complaints against receipt in up to five business days beforethe date set for opening of the bids.

International Bid Tenders: In international bid tenders, the invitation tobid must comply with the guidelines of monetary policy and foreign trade andmeet the requirements of the appropriate agencies. When it is permitted forthe foreign bidder to quote prices in a foreign currency, Brazilian bidders mayalso do so. The payment will be made in Brazilian currency, at the prevailingexchange rate on the business day immediately prior to the effective paymentdate.

Withdrawal of a bid: After the qualifying phase, withdrawal of a bid is notallowed, except for supervening reasons accepted by the Judging Commission.Otherwise, the following penalties will apply: warning, fine and suspensionfrom the right to bid.

Unperformable bids: In no bidding process of any type will the presentationof absurdly low, symbolic or zero prices incompatible with market prices beallowed, except when they refer to materials and installations that are theproperty of the bidder, for which he renounces a portion or all of theremuneration. Unperformable prices shall be considered those which cannot


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demonstrate their feasibility by means of documentation evidencing the costsof inputs with those of the market.

Advantages not provided for: No offer or advantage not provided for in theinvitation to bid, including subsidized or open-ended financing, shall beconsidered, nor prices or advantages based on the offers of the other bidders.

Performance of Investigations: It is permitted for the Judging Commissionat any phase of the bid tender to perform investigations intended to clarify orcomplement fact finding, it being prohibited to later include any document orinformation that should have been a part of the original bid.

11.6. Administrative contracts

Administrative contracts are regulated by the precepts of public law and thegeneral theory of contracts under private law apply to them. At the discretionof the proper authorities, provided it is called for in the invitation to bid, asecurity may be required in the contracting for construction work, services andprocurement, of the bank guarantee or performance bond type, or a securitydeposit in cash or government bonds. The value of the security may not exceed5% of the value of the contract, and in the case of construction work and large-scale services involving considerable financial risk, the limit provided for maybe increased to 10%.

Duration of contracts

The duration of the contracts shall be restricted to the valid period of therespective credits, limited to a maximum duration of 60 months, contracts foran indefinite time period being prohibited. The contractual term may beextended, provided the conditions set initially are maintained.

Alteration of contracts

Administrative contracts may be altered, provided they are duly justified inthe case of alterations in design, or quantitative increases or decreases to itsobject. These are limited to 25% of the initial value of the contract, adjustedfor inflation, in the case of purchases or services, and 50% in the case ofconstruction work, remodeling of buildings and equipment.

In the case of cancellation of the services, construction work and goods, if thecontractor has already acquired the materials and placed them at the work site,they must be paid for by the Government for the price they were acquired at,


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with indexing for inflation, and the contractor may claim eventual damagesarising from the cancellation, if duly proven.

Rescission of contracts

The following are considered grounds for rescission:

- non-compliance or irregular compliance with contractual clauses;- delays in the execution of the contract which compromise results within

the stipulated time frame;- unjustified delays;- total or partial subcontracting, associations with third parties, total or partial

assignment or transfer, as well as split-offs, mergers or incorporations notallowed for in the invitation to bid;

- failure to comply with reasonable determinations of the authority designatedto monitor execution;

- repeated commission of faults;- declaration of bankruptcy;- dissolution of the company or death of a contractor;- change in the corporate structure or purpose of the company;- widely known reasons of public interest;- cutbacks by the Government greater than 25%;- suspension of execution by order of the Government for a period greater

than 120 days, except in the case of public emergency;- delay of over 90 days in payments due the contractor by the Government;- failure of the Government to provide access to the location, area or object;- occurrence of an act of God or force majeure.

Reimbursement of the contractor

When the rescission occurs for one of the reasons underlined above, throughno fault of the contractor, the latter shall be reimbursed for appropriatelyevidenced losses it may have suffered, being further entitled to the refundingof the security, of payments made in executing the contract up to the date ofrescission, and payment for demobilization costs.

Administrative Sanctions

Administrative sanctions are the following: warning, fine as provided for inthe invitation to bid or in the contract, temporary suspension from participationin bid tenders and barring from contracting with the Government for a periodof two years and declaration of unfitness to bid or contract with the PublicAdministration. In the case of the trading floor mode of operation, the periodof two years for suspension from bidding is raised to five years.


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Crimes and Non-Performance of Bid Work

The following are considered crimes against the public interest:

- dispensing with use of the bid tender process except in the circumstancesprovided for in Law 8666/93;

- frustrating or defrauding, by adjustments, the competitive character of thebidding process, with the intention of obtaining advantages for oneself orfor third parties;

- promoting private interests directly or indirectly vis-à-vis the Government,giving rise to celebration of a contract which is later declared invalid by theJudiciary Branch;

- permitting, facilitating or giving cause to any modification or advantage,including extension of contracts to favor the winning bidder during theexecution of contracts;

- paying invoices outside the chronological order in which they are due;- violating the confidentiality of the bid;- defrauding, impeding or disturbing the performance of any act in the bidding

process;- eliminating a bidder by violence, threats, or offers of advantages;- practicing a fraud against the Public Treasury by arbitrarily raising prices,

selling counterfeit goods as authentic ones, or substituting one grade ofmerchandise for another, making the bid for execution of the contractunreasonably costly.

The unjustified refusal of the winning bidder to sign the contract within thetime frame stipulated by the Government is considered non-performance ofthe clauses, subjecting it to penalties under Law 8666/93.

11.7. User rights and obligations

The user has the right and obligation to receive appropriate services, to receivefrom the granting party and the concessionaire all information necessary toprotect individual or community interests, to exercise free choice in obtainingand using the service, to bring to the attention of the government and of theconcessionaire any irregularities, to communicate to the proper authorities anyillicit acts committed by the concessionaire in the rendering of the service, andto contribute towards the ongoing good condition of public property.


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11.8. On-line bidding process

The on-line trading floor was set up in December of 2000 and has as its objectivesboth to streamline the work of purchasing goods and to reduce operating costs,not only for the Government but also for the supplier. It is also possible tooperate several trading sessions simultaneously, and those companies locatedfarther away from the government agency that requires the goods are nowable participate on an equal footing with others, which is a major benefit forsuppliers. In addition, individuals not involved in the bidding process canmonitor the process in real time through the Internet, which adds transparencyto the trading sessions.

When registering to participate in electronic trading sessions, the supplier ’sinformation is cross-checked with the databases of the Internal Revenue Service,the PGFN (the Federal Treasury Department/Attorney General’s office), theFGTS (Unemployment Severance Fund) and the INSS (Social SecurityAdministration) to prevent those who have debts pending with the governmentfrom participating in the bidding.

Provisional Measure No. 2026 – enacted in May of 2000 and regulated by DecreeNo. 3555, enacted in August of 2000 – defines the goods and services for whichthe electronic trading sessions may be used. In brief, they are “those for whichperformance and quality standards can be concisely and objectively defined inthe invitation to bid using the usual market specifications; that is, those thatare offered by various suppliers and are easily compared to each other in orderto facilitate the decision on purchasing or hiring.” There is no limit on theprice of the purchasing or hiring done through the electronic trading sessions, apoint in which it differs from other operating modes covered by the LawGoverning Bidding Processes (Law No. 8666/93).

11.8.1. At the Federal Government level:

How to register:

It is possible to participate in electronic trading sessions at Comprasnet – TheGovernment Procurement Portal (www.comprasnet.gov.br). The first step isto check whether the company is already registered with SICAF (the UnifiedSupplier Register). In order to register, the interested party must go to thesection of the site marked “free access” and choose the option SicafWeb/CorporateSupplier or Individual Supplier, then go to Include Supplier.

When this has been done, the user must register on the Comprasnet site, usingthe option “Register”. He/she must provide the information requested andchoose the services desired, in this case the Electronic Trading Floor (there is a


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charge for this service). In order to register, the number of the SICAF registrationreceipt must be supplied, along with the social security number (CPF) of themanager and the date the company was opened. By clicking on the desiredoption, the supplier enters the site of the bank chosen, where he/she provideshis Branch number, account number and the amount to be paid. Payment ison-line; that is, by supplying this data the amount to be paid for registeringwill automatically be debited from the account, and when accessing Comprasnetthe company will be able to use all of the services included in the particularpackage that has been acquired.

How to participate in on-line trading sessions:

In order to participate in an on-line trading session, a proposal should be sentcontaining the prices of the items the company is bidding to supply, within thetime period established in the invitation to bid. If the values are below theposted reference value, the proposal will be accepted. When the bidding phasebegins, the supplier goes to the option Electronic Trading Floor and clicks on“bids”. When a proposal is sent, the system confirms whether or not it has beensuccessfully registered. Even so, it is advisable to double check under “proposals– verify.” At the time of registration, it is possible that some sort of attachment(i.e. a spreadsheet or document) may be requested, but such a requirement bythe Trading Floor Mediator will be specified in the invitation to bid.

If the proposal is accepted, the values may not be changed at a later date.However, if it is not accepted, it may be presented again at a value lower thanthe reference value. When the bidding phase begins, all the messages can beseen by all participants, the Trading Floor Mediator and suppliers, but theidentity of the companies participating in a particular trading session is notdisclosed. The participants will only be identified after the bidding phase isconcluded. To find out the winner of the bidding process, access the free accessarea under “consultations” and “results of bidding processes”.

For more information on the services offered through the site, users may [email protected] or call the Service Center at 0800-782323.

Source: Brazilian Laws and Comprasnet


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12. Financing

12.1. Introduction

The Federal Government’s Brazil Empreendedor Program has as its objectives tostimulate the development of micro, small, and medium-sized companies andto improve their professional level. The Federal financial institutions that willoperate under the Program are: Banco do Brasil (Bank of Brazil), Banco do Nordes-te (Bank of Northeast), Banco da Amazônia (Bank of Amazon) and Caixa Econô-mica Federal.

To obtain further information, those interested in applying for financing shouldconsult the Sebrae Mobile Unit for information on the procedures to be followedin applying for credit through the financial institutions.

12.2. BNDES financing for micro, small, and medium-sizedcompanies

12.2.1. Classification of companies by size

The classification adopted by BNDES based on company size is the following:

Micro-companies: annual or annualized gross operating income* of up toR$900 thousand (nine hundred thousand reais).

Small companies: annual or annualized gross operating income* greater thanR$900 thousand (nine hundred thousand reais) and equal to or less than R$7.875thousand (seven million, eight hundred seventy-five thousand reais).

Medium-sized companies: annual or annualized gross operating income*greater than R$7.875 thousand (seven million, eight hundred seventy-fivethousand reais) and equal to or less than R$45 million (forty-five million reais).

Large companies: annual or annualized gross operating income* greater thanR$45 million (forty-five million reais).

(*) Annual gross operating income is considered to be the income earned inthe calendar year as a result of the sale of goods and services on one’s ownbehalf, the price of services rendered and the result of operations carried out onbehalf of third parties, not including returns and unconditional discountsgranted.


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In the case of activities started after the beginning of the calendar year, thelimits above shall be proportional to the number of months during which thecorporate entity or individual firm is in activity, disregarding fractions of months.In the case of companies in the implementation phase, the annual sales forecastfor the undertaking will be considered, taking into account the total installedcapacity.

When the company is controlled by another company or is part of a businessgroup, the classification of size will be based on the consolidated gross operatingincome. The above information was supplied by the BNDES.

12.2.2. Financeable investments / Items

Investments aimed at the implementation, expansion, modernization orrelocation of the company may be financed, as well as projects for upgradingtechnology, quality and productivity, including but not limited to, the followingexpenses:

- construction or remodeling of property and miscellaneous installationsrelated to the objectives of the business;

- acquisition of machinery and equipment manufactured in Brazil;- acquisition or development of software;- training of personnel;- research, studies and projects;- franchise fees and inaugural advertising for the venture;- commercialization of goods and services for export;- part of the working capital, when related to other financed investments.

Further information on working capital may be obtained on the BNDES site.

12.2.3. Lines of financing

12.2.3.1. BNDES Automatic

Through financial institutions authorized by the BNDES, financing of up toR$7 million is available, for purposes including the acquisition of machinesand equipment, either Brazilian-made or imported. The total term of thefinancing is determined in accordance with the ability to pay of the venture,company or business group. According to BNDES, the share of total valuefinanced is the following:


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- machines and equipment: up to 80%;- in the case of micro- and small companies and ventures located in areas

covered by Regional Programs (PAI, PNC, PCO and RECONVERSUL):up to 90%;

- other items for investment: up to 60%;- in the case of micro- and small companies: up to 90%;- ventures located in areas covered by Regional Programs: up to 80%;- importation costs of imported machines and equipment (see the BNDES

Support Program for Equipment Imports).

Ventures which are not financeable are the following:

- business restructuring;- real estate ventures (residential buildings, time-sharing projects, residential

hotels and others); motels, saunas and hot springs resorts; banking/financialactivities;

- sale of firearms;- cutting, exploitation and sale of native wood, production of pig iron and

mining ventures using rudimentary mining methods or panning.

Other non-financeable items are:

- existing land and improvements;- used machines and equipment (except for micro-companies);- animals for resale, formation of pasturelands in areas of environmental

preservation;- vehicles;- working capital for exportation, agriculture and livestock breeding (except

for micro-companies that are service providers).

In order to obtain financing, the interested party should visit the chosen financialinstitution, which will provide information on the documentation requiredand whether the credit can be extended, and if so, it will be able to negotiatethe guarantees. Following approval by the institution, the process is submittedfor ratification and release of funds by the BNDES.

12.2.3.2. FINAME

With no limit on the amount, these are loans for the acquisition of new machinesand equipment made in Brazil and leasing of Brazilian-made equipment throughauthorized financial institutions (to consult the list, contact BNDES).


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The total term for financing is:- up to 60 months for financing of up to R$7 million;- up to 48 months for passenger transport;- up to 72 months for independent cargo transporters.

Financing of more than that established above: to be determined based on theability-to-pay of the venture, company or business group.

In the case of acquisition of buses that make up the Integrated System forUrban Passenger Transport: to be determined based on the ability-to-pay of theventure, company or business group.

The proportion financed is the following:

- up to 90%: micro- and small companies in any region of the country; medium-sized and large companies located in the areas covered by the RegionalPrograms (PAI, PNC, PCO and RECONVERSUL); acquisition of buses thatare part of the Integrated System for Urban Passenger Transport in any regionof the country, and independent cargo transporters;

- up to 80%: medium-sized and large companies located in the Southern andSoutheastern regions of the country (except in the cities in those regionsincluded in the Regional Programs – the state of Espírito Santo, parts of thestate of Minas Gerais covered by the Development Plan for the Northeast,and the area designated as the Southern Half of the state of Rio Grande doSul).

In order to obtain financing, the interested party should visit the chosen financialinstitution, which will provide information on the documentation requiredand whether the credit can be extended, and if so, it will be able to negotiatethe guarantees. Following approval by the institution, the process is submittedfor ratification and release of funds by the BNDES. For more information, access:www.bndes.gov.br/finame.

12.2.3.3. BNDES-Exim

This is financing of the following types for the export of goods and servicesthrough authorized financial institutions:

- Pre-Shipping: finances the production of goods to be exported in specificshipments;


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- Special Pre-Shipping: finances the domestic production of goods exported,without being tied to specific shipments but having a preset time period fortheir realization;

- Post-Shipping: finances the commercialization of goods and services abroad,through refinancing to the exporter or through the use of a buyer’s creditfacility.

The guarantee instruments used in BNDES-exim operations are the same asthose offered by the major export credit agencies in the world. In addition, thefollowing are available to facilitate access to export credit:

- The Guarantee Fund to Promote Competitivity [FGPC] (Collateral Fund)aimed at facilitating access to credit by micro-, medium-sized and smallcompanies;

- Export Credit Insurance, which makes it possible to cover commercial andpolitical risks on exported goods and services. In Brazil this tool is offered bythe SBCE – Brazilian Export Credit Insurance Company.

12.3. Other financing

For information on other types of financing, contacting the BNDES. directly isrecommended.

12.4. Guarantees

Real and personal guarantees will be required of the controlling partners of thecompany. At the discretion of the financial institutions that operate the Program,the FGPC (Collateral Fund) may be used, as well as dispensing with the realguarantee on operations of up to R$500 thousand with coverage of the FGPC.

12.5. Applying for financing

To apply for financing, visit the SEBRAE Mobile Unit or a branch office of thefollowing banks: Banco do Brasil (Bank of Brazil), Banco do Nordeste (Bank ofNortheast), Banco da Amazônia (Bank of Amazon) and Caixa Econômica Federal.

Source: BNDES.


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13. Cultural Incentive Laws

13.1. Federal incentives

13.1.1. Benefits

13.1.1.1. Agreements for transfer of funds

The Ministry of Culture enters into agreements with states, cities, public entitiesand private, not-for-profit entities for the realization of cultural projects. Theseagreements are aimed at projects for the recuperation and preservation of thecountry’s historical and artistic heritage, the establishment of libraries, theproduction of shows and plays, and support in the advertising of films, artexhibits, etc. The proposals will be analyzed by the Departments reporting tothe Ministry of Culture, based on the parameters established for each type ofactivity.

To obtain further information, the proposals for benefits under the agreementshould be submitted to the Departments of the Ministry of Culture, based onthe field of cultural interest. They are the following: Department of Books andReading, Department of Museum Heritage and Plastic Arts, and Theater Artsand Audiovisual Department.

The program for submitting projects may be downloaded from the Internetsite of the Ministry of Culture and may also be obtained from one of the Ministryof Culture locations.

13.1.1.2. Rouanet Law

The projects approved by the National Commission on Cultural Incentives(CNIC) are eligible to receive sponsorships and donations from companies andindividuals who may in turn deduct the donations, either partially or in full,from their income tax payable. The law that makes this possible is Law nº8.313/91.

The law provides that the following are eligible to apply for the benefits:individuals, for-profit and not-for-profit companies and institutions of a cultu-ral nature, and Government-related public entities such as foundations, quasi-governmental agencies and institutes, provided they have independent legalidentities and are cultural in nature. Projects should aim at developing forms ofexpression, creative modes, processes for the preservation and protection ofBrazilian cultural heritage and studies and methods for interpreting cultural


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realities, as well as contributing to providing the means for access to artisticand cultural values and assets, including the following segments:

- theater, dance, circus, opera, mime and the like;- movie production, video making, photography, recording and the like;- literature, including reference works;- music;- plastic arts, graphic arts, engravings, posters, stamp collecting and the like;- folklore and handcrafts;- cultural heritage, including historical, architectural, libraries, museums,

archives and other collections;- humanities; and- non-commercial educational and cultural radio and television.

Projects should provide benefits to the population and be justifyed on the areasand segments specified by the law. The democratization of access by thepopulation to cultural assets is also an objective of the law and consequentlymechanisms that facilitate this access – such as free tickets for shows andplays, tickets at more accessible prices, distribution of books to libraries, andfree art exhibits, among others – are fundamental to fulfilling this objective.

Law nº 8.313/91 allows the donor or sponsor to deduct from the amount of taxpayable on his/its tax return the amounts actually contributed to support cul-tural projects approved under the system stipulated by the law itself, based onthe following percentages:

- in the case of individuals, eighty percent of the amount of donations andsixty percent of the amount spent on sponsorships;

- in the case of corporate entities subject to tax based on real profit, fortypercent of the amount spent on donations and thirty percent of the amountspent on sponsorships.

In addition, companies may include the total value of donations andsponsorships as operating expenses, thus reducing the real profit of the companyfor the fiscal year with a consequent reduction in the amount of tax payable.The total deducted from tax payable may not exceed 4% of the total value forcorporate entities and 6% in the case of individuals.

In addition to tax advantages, the sponsor may, depending on the project itsupports, obtain a return in kind, consisting of products such as books, CDs,artwork, CD-roms, etc. The right to receive artistic products generated by theproject is limited to 25% of total production and should be used only for freedistribution.


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To obtain further information, contact the Department responsible for the areaof interest directly; projects should be submitted on the appropriate form tothe Culture Ministry, to its Regional Offices or to the coordinator’s office ofthe National Cultural Support Program (PRONAC) at locations associated withthe Ministry (just consult the Ministry of Culture site on the Internet).

From the Ministry of Culture site it is possible to download the program forsubmitting projects, which can also be obtained from one of the Ministry ofCulture locations. Following approval published in an Administrative Ruling,an expense spreadsheet for the project should be submitted. The manual andform for presenting project accounts can also be found on the Ministry ofCulture site.

13.1.1.3. Audiovisual Law

Under Law No. 8.685/93, up until fiscal year 2003 it will be possible to deductfrom income tax the investments made in independent Brazilian audiovisualcinema productions through the acquisition of shares in their commercializationrights, for projects approved by the Ministry of Culture. Benefits under thelaw may also be extended to exhibition, distribution and technical infrastructureprojects specific to the audiovisual area, except for the acquisition, remodelingor construction of real estate property.

The deduction permitted is limited to 3% of the total tax payable, both forindividuals and corporate entities. Corporate entities taxed on the basis of realprofit may, in addition, deduct the total amount of the investment as operatingexpenses, with positive results in terms of reducing their tax payable.

The law also allows for a reduction of 70% of the tax incurred on the remittanceof profits and dividends resulting from the exploitation of foreign audiovisualworks in Brazil, provided the funds are invested in the co-production ofindependent Brazilian audiovisual cinema productions in projects previouslyapproved by the Ministry of Culture.

To benefit from the incentives under the Audiovisual Law, projects shouldnecessarily meet the following requirements and not be of an advertising nature:

- corresponding contribution of own funds or those of third parties makingup 20% of the overall amount;

- maximum funding limit of 3 million Brazilian reais;- technical and artistic feasibility;- commercial feasibility;


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- approval of the budget and schedule of stages of execution and disbursements,with a set date for conclusion.

Further information may be obtained by contacting the Department forAudiovisual Development. From the Ministry of Culture site, it is possible todownload the program for submitting projects, which can also be obtainedfrom one of the Ministry of Culture locations. Following approval published inan Administrative Ruling, an expense spreadsheet for the project should besubmitted. The manual and forms for presenting project accounts can also befound on the Ministry of Culture site.

13.1.1.4. Provision of travel tickets

The provision of tickets under the “Cultural Dissemination Program” is carriedout by the Ministry of Culture based on the availability of funds, and benefitsartists, technicians and students of Brazilian culture who have been invited toparticipate or to present specific works they have produced at cultural eventsin Brazil and abroad. The procedure for interested parties is to submit anapplication on the appropriate form, which can be obtained from Ministry ofCulture Departments at least 50 days in advance.

The areas covered by the Program are: Theater Arts, Plastic Arts, Music,Historical and Cultural Heritage, Audiovisual and Humanities, and the benefitsare granted only to Brazilians and individuals. In the case of a group, the ticketsshould be requested by its leader, attaching to the application the identificationforms for each member of the group, duly filled out and signed.

The required documentation for participation in the program is the following:

- certified copy of the official invitation signed by the entity organizing theevent;

- program of the event and document providing full information regarding it;- 2 (two) letters of recommendation commenting on the professional

qualifications and work of the candidate, one signed by a professional fromthe same field of endeavor and the other by a well-respected figure in thecultural area, including full identification of the writers (profession andinstitution where the individual works);

- certified copies of the ID card and Social Security card of the candidate and,in the case of a group, those of each one of its members;

- resume of the applicant, or of the group, emphasizing the principal activitieswithin his/her field of endeavor (attach copies indicating awards received,


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catalogs, printed materials, programs of presentations made, etc.);- application form filled out and signed by the applicant (obtained from

Ministry Departments);- an affidavit of commitment filled out and signed by the candidate or, in the

case of a group, by each of the group members.

The restrictions on the benefit are the following:

- public servants on official missions or missions of interest to Federal, Stateor City agencies may not benefit;

- expense stipends, daily allowances, insurance or support for thetransportation of scenery, works and/or equipment will not be provided;

- tickets will not be provided for touring companies of shows or plays;- no more than one ticket per year will be provided to the same beneficiary;- use of the ticket by a substitute will not be authorized.

According to Program regulations, the beneficiary shall be obliged after theevent to return the ticket stub and boarding pass and also present a report onhis/her participation in the event, together with documentation evidencingpresentation of his/her work (folder, catalog, program, articles in the media) inup to 30 (thirty) days following his/her return.

13.1.1.5. Repayable loans

The financial institution designated by the Ministry of Culture grants the loan,following approval of the application and on special terms, for the productionof theater, circus, classical or instrumental music presentations, recording ofCDs and publishing of literary works. The granting of these repayable loansapplies to the fields of theater arts, circus, music, and books produced by privatecorporate entities of a cultural nature.

More information, as well as the time period for presenting projects in eachcase, can be obtained from the Music and Theater Arts Department. Projectsmay be submitted personally or by mail to the Music and Theater ArtsDepartment in Brasília, to the National Arts Foundation (FUNARTE) in Rio deJaneiro, or to the Regional Offices of the Ministry of Culture.

13.1.1.6. Virtuoso scholarships

The artistic and cultural studies (Virtuoso Scholarship) program has as itsobjective the granting of scholarships for professional studies in Brazil and abroad


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to authors, artists and technicians directly engaged in artistic and culturalproduction. The Program aims at fostering the refinement of these professionals’skills to improve their performance in the workplace. Applicants will be chosenthrough a selection process that takes into account the candidate’s résumé, thequality of his/her educational proposal and/or plan for further education, aswell as the excellence of the institution chosen. The fields covered by theprogram are the following: theater arts, music, plastic arts, historical and cul-tural heritage, audiovisual and literature.

Possible candidates are artists, authors and technicians directly engaged in artisticand cultural production, Brazilian, at least 30 years of age, who can provideproof of their professional activities and acceptance in the intended course orinternship program. The duration of the scholarship is from 3 to 12 months,depending on the candidate’s study and/or improvement plan, and on theprogram schedule for the course and/or internship program. The scholarshipmay be extended once, for a maximum of 6 months, upon presentation by theteaching institution of proof of the scholarship holder’s progress and of theneed for this additional period. The extension is subject to availability of fundson the part of the Ministry of Culture

Applications should be submitted to the Ministry Departments, in accordancewith the candidate’s field of study, and a single copy of the full documentationshould be sent to the Ministry of Culture by the cutoff date for registration.For information on the documents necessary for each specific field, as well asthe application form for the scholarships, the candidate should contact theMinistry of Culture.

13.1.1.7. Donation of musical instruments

The objective is the donation of musical instruments to bands and the offeringof courses for the training of conductors and for conservation of instruments,thus stimulating the musical training of the Brazilian population. Applicationsshould be submitted directly to the Music and Theater Arts Department of theMinistry of Culture and the interested party should present his/her projectusing the appropriate form, which may be obtained from the Department oron the Internet site of the Ministry of Culture.

13.2. How to contribute

13.2.1. Individuals

In order for a project to receive contributions, it must be registered in the ArtsSponsorship Program Project Bank and/or the National Culture Fund – and ifyou would like information on all projects in order to decide where to place


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your support, you should contact the Ministry of Culture. Those interested inregistering, whether artists, producers or public and private institutions, shallpresent their cultural projects to the Ministry, which issues its official opinionin up to 60 days. This initial evaluation guarantees the project complies withthe provisions of law, as well as permitting control of the funds received and ofthe actual execution of the projects.

If an individual directs his/her contribution to the National Culture Fund, he/she will be supporting the entire body of projects being carried out by publicinstitutions. Should he/she wish to support a specific private or company-runproject, the contribution is allocated to the Arts Sponsorship Program. In bothcases, the individual may deduct 80% of the amount donated from his/her incometax, provided the amount deducted does not exceed 6% of tax payable for thefiscal year (or 5% if the person also has made donations to other causes).

How to contribute in the different situations:

1) Cultural donation without specifying the project. The donation may bemade directly to the National Culture Fund by means of a bank deposit inthe Bank of Brazil, as follows: account name Banco do Brasil – FNC; accountNo. 170.500-8; Branch 3602-1; identifying code 42000134902004-5, includingthe name and Social Security (CPF) number of the donor on the deposit slip.The slip is valid proof to be attached to the individual’s income tax return inorder to allow the deduction.

2) To donate to a specific project, as well as to look for a project that interestsyou, consult the Project Bank, in which the projects appear with a description,the cultural field and the total amount of the project, as well as the artist,producer or institution responsible and the area which will be served. Oncethe project has been selected, simply contact your cultural agent directly. Toconsult the Project Bank, just contact the Ministry of Culture.

13.2.2. Corporate entities

To benefit from fiscal incentives, the investor should choose a project that hasreceived the approval of the Ministry of Culture, through the NationalCommission on Cultural Incentives (CNIC). To do so, just contact the Ministrydirectly for information on the approved projects, which are updated monthly.In the case of support by a corporate entity, the deduction from income taxmay be up to 4%.

Source: Ministry of Culture


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14. Annex

14.1. Addresses referred in Chapter 13

14.1.1. Departments

Audiovisual Department (SAV)

Projects:

- film in pellicle, infrastructure;- exhibitions, events, festivals, seminars;- films.

Telephone: (61) 316-2232e-mail : [email protected]: Esplanada dos Ministérios, Bloco B, 3° andarBrasília-DF, CEP 70068-900

Department of Museum Heritage and Plastic Arts (Secretaria doPatrimônio, Museus e Artes Plásticas -SPMAP)

Projects:

- restoration of museums, churches, historical buildings, theaters, etc.;- purchase of equipment and permanent material for restored buildings;- organization of historical and cultural events;- support to afro, indigenous projects, handcrafts and folklore.


Department of Books and Reading (Secretaria do Livro e Leitura - SLL)

Projects:

- publication of books;- modernization of books lot.

Telephones: (61) 316.2215 / 316.2216e-mail : [email protected] - [email protected]


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Address: Esplanada dos Ministérios, Bloco B, 3° andarBrasília-DF, CEP 70068-900

Music and Theater Arts Department(Secretaria de Música e Artes Cênicas - SMAC)

Projects:

- theater, dance, circus, opera e mimic;- popular, erudite and instrumental music.


14.1.2 Regional Offices of the Ministry of Culture

Rio de Janeiro

Telephone(s): +55 21 262.2426 / 220.4189 / 220.6590 / 220.6094Fax: +55 21 220.7715Address: Rua da Imprensa, nº 16 - Palácio Gustavo Capanema - 2º andar - CentroCEP: 20030-120 - Rio de Janeiro-RJe-mail: [email protected]

Pernambuco

Telephone(s): + 55 81 3424-7611/ 3424-7173Fax: +55 81 3424-9679Address: Rua do Bom Jesus, 227/3º andar - Recife AntigoCEP: 50.030-170 - Recife-PEe-mail: [email protected]

São Paulo

Telephone(s): + 55 11 539.6304Fax: +55 11 5539.6308Address: Largo Senador Raul Cardoso, 133 - Vila ClementinoCEP: 04021-070 - São Paulo-SPe-mail: [email protected]


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Minas Gerais

Telephone(s): + 55 31 3224-6785/ 3273-6415Fax: +55 31 3213-4602Address: Rua Aarão Reis, nº 423 - Praça da Estação - CentroCEP: 30120-000 - Belo Horizonte-MGe-mail: [email protected]

National Arts Foundations (FUNARTE):

Telephones(s): +55 21 279.8003 / 279.8004 / 279.8005 / 262.5547 / 532.7144Fax: +55 21 262.4895Address: Rua da Imprensa, nº 16 - Palácio Gustavo Capanema - 5 º andar - CentroCep: 20030-120 - Rio de Janeiro-RJ

14.2. Additional Texts

14.2.1. SIMPLES

Integrated system for payment of taxes and contributions by micro- and smallcompanies.

Consists of unified payment of the following taxes and contributions: IRPJ(Corporate Income Tax), PIS (Employees Profit Participation Program), COFINS(Social Contribution on Billings), CSLL (Social Contribution on Net Income),Employer portion of INSS (Social Security Contribution), and IPI (Excise Tax),if applicable, and may include ICMS (Value-Added Tax) and/or ISS (Tax onServices) owed bya micro-company and/or small company, provided that theState and/or City in which it is established has a formal agreement with the“SIMPLES” system. Registration with the “SIMPLES” system exempts thecorporate entity from payment of the contributions instituted by the FederalGovernment, such as those for SESC (Social Service for Trades), SESI (SocialService for Industry), SENAI (Social Service for Micro- and Small Companies)and the like, as well as those relating to educational assistance and theEmployer ’s Union Contribution. Corporate entities classified as micro-companies or small companies, may choose to operate using the “SIMPLES”system, provided they are in good standing with the Internal Revenue Serviceand the Social Security Administration (INSS).

The option of taxation under the “SIMPLES” system may be made when thecompany is registered with the National Corporate Taxpayer Registry or as achange of registry by handing in the Registration Form for Corporate Entities


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(FCPJ) by the last business day of the month of February of the year in course,and the taxpayer is subject to the “SIMPLES” system as of the first day of theyear in which the option is taken.

14.2.1.1. Micro-company

Micro-company (ME): a corporate entity whose gross income for the calendaryear is equal to or less than R$120.000,00 (one hundred twenty thousand reais),gross income being considered to be the revenues form the sale of own goodsand services, the price of services rendered and the revenue from operations forthird parties, excluding cancelled sales and unconditional discounts granted.

14.2.1.2 Small company

Small company (EPP): a corporate entity whose gross income for the calendaris greater than R$ 120.000,00 (one hundred twenty thousand reais) and lessthan or equal to R$ 1.200.000,00 (one million two hundred thousand reais),gross income being considered to be the revenues from the sale of own goodsand services, the price of services rendered and the revenue from operations forthird parties, excluding cancelled sales and unconditional discounts grated.


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14.3. Laws

LAW Nº 7.232, OF 29 DE OCTOBER 1984.

Determines the National Policy for Computer Science, andfor other measures.

The President of the Republic:

I hereby make known that the Congress decrees and I sanction thefollowing Law:

Art. 1º This law establishes the principles, objectives and guidelines ofthe National Policy for Computer Science, its purposes and mechanisms offormulation, creates the National Council of Information, Technology andAutomation, CONIN, and determines with regard to the Special Secretariat ofComputer Science, SEI, creates the Computer Science Exportation Districts,authorises the creation of the Technological Centre for Computer Science –CTI, institutes the National Plan of Computer Science and Automation andthe Special Fund for Computer Science and Automation.

NATIONAL POLICY FOR COMPUTER SCIENCE

Art. 2º The objective of the National Policy for Computer Science is tomake the activities of computer science possible at a national level, so as toimprove the social, cultural, political, technological and economical developmentof the Brazilian society, in accordance with the following principles:

I - governmental action in the orientation, co-ordination and stimulationof computer science activities;

II – participation of the State in productive sectors at a supplementarylevel, when decreed to be of national interest, and in cases where the nationalprivate enterprise lacks conditions to act or if it is not of their interest;

III – intervention by the state so as to assure a balanced protection forthe national production of certain classes and types of goods and services aswell as the growing technological capacity;

IV – prohibition of the creation of monopolistic situations, whether byjure et de facto;

V – continuous adjustment of the computerisation process for thepeculiarities of the Brazilian society;


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VI – political orientation in the activities of computer science, that takesinto account the necessity to preserve and refine the cultural identity of thecountry, the strategic nature of computer science and the influence of this onthe efforts developed by the country to reach better periods of social welfare;

VII – direction of all national efforts for the sector, aiming to meet theprogrammes that have priority regarding economical and social developmentand the strengthening of the National Power, in its various fields of expression;

VIII – establishment of mechanisms and legal and technical instrumentsfor the protection of the secrecy of stored data, processed and transmitted, ofinterest to the privacy and safety of individuals and legal entities, private andpublic;

IX – establishment of mechanisms and instruments so as to ensure thatevery citizen has the right of access to and rectification of information relatedto himself in public or private databases;

X - establishment of mechanisms and instruments so as to ensure thebalance between the productivity profits and the levels of employment in theautomation of productive processes;

XI – governmental incentive and protection directed to the developmentof national technology and the economical-financial and commercialstrengthening of national companies, as well as stimulation of the reduction ofproduct and service costs, so as to ensure their increased internationalcompetitiveness.

Art. 3º To all intents and purposes of this Law, activities of computerscience are those related to the rational and automatic treatment of informationand, especially those of:

I – research, development, production, importation and exportation ofelectronic components and semiconductors, optical-electronics as well asrespective raw materials of electronic types;

II – research, importation, exportation, manufacturing, commercialisationand operation of machines, equipment and devices based on digital techniqueswith technical functions for the collecting, treatment, structuring, storing,commutation, recuperation and presentation of information, its respectiveelectronic raw materials, parts, pieces and physical support for operation;

III – importation, exportation, production, operation andcommercialisation of programmes for computers and automatic machines for


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the treatment of information and respective associated technical documentation(software);

IV – structuring and exploration of databases;

V – rendering of services for computer technology.

§ 1º (Vetoed).

§ 2º The structuring and exploration of databases (vetoed) will beregulated by specific law.

INSTRUMENTS OF THE NATIONAL POLICY FOR COMPUTERSCIENCE

Art. 4º The instruments of the National Policy for Computer Scienceare as follows:

I – to stimulate the growth of computer science activities so as to becompatible with the development of the country;

II – to institutionalise rules and standards of homologation andcertification of quality for computer science products and services;

III – the mobilisation and co-ordinated application of public financialresources destined for the stimulation of computer science activities;

IV – the betterment of the international co-operation means regardingthe efforts to increase the professional competency/ability in the country;

V – the formation, training and improvement of human resources forthe sector;

VI – the establishment of a special system for the concession of tax andfinancial incentives, in favour of national companies, destined for the growthof computer science activities;

VII – the administrative penalties for the non-observance of precepts ofthis Law and regulations;

VIII – the control of the importation of computer science goods andservices for 8 (eight) years counting from the publication of this Law;


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IX – the standardisation of a protocol for the communication betweentreatment and information systems; and

X – the establishment of specific programmes for the stimulation ofcomputer science activities, by financial institutions of the state.

BRAZILIAN COMPUTER SCIENCE AND AUTOMATIONCOUNCIL

Art. 5º Art. 32 of Decree-Law No. 200, of 25 February, 1967, came intoforce with the following wording:

“Art. 32. The Presidency of the Republic is essentially constituted by theCivil Cabinet and the Military Cabinet. The following areas are also included,acting as immediate advisory bodies to the President of the Republic:

I – the National Security Council;

II – the Economical Development Council;

III – the Social Development Council;

IV – the Planning Secretariat;

V – the National Service for Information;

VI – the General of the Armed Forces;

VII – the Administrative Department of Public Services;

VIII – the General Consultancy of the Republic;

IX – the High Commander of the Armed Forces;

X – the National Council of Information, Technology and Automation,CONIN.

Sole paragraph. The Chief of the Civil Cabinet, the Chief of the MilitaryCabinet, the Chief of the Planning Secretariat, the Chief of the National Servicefor Information and the Chief of the General of the Armed Forces are Ministersof the State title-holders of the respective agencies.

Art. 6º The National Council of Information, Technology andAutomation - CONIN is constituted by representatives from the Ministers of


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the Economy, Public Finances and Planning, of Infrastructure, of Foreign Affairs,by the Chief of the General of the Armed Forces and by the Science andTechnology and Federal Administration Secretariat, representing the ExecutivePower, as well as 8 (eight) representatives from non governmental entities,comprising the representatives from the industry and the users of computerscience goods and services, of the professionals and workers from the sector,from the scientific and technological community, from the press and juridicalarea. (Art. revoked with paragraphs by Law No. 8.248, of 23/10/91)

§ 1º The Presidency of the National Council of Information, Technologyand Automation - CONIN, belongs to the Science and Technology Secretariat.

§ 2º In order to achieve the objectives of the National Policy for ComputerScience, the National Council of Information, Technology and Automation -CONIN, may authorise the creation, and the extinction, of Centres ofTechnological Research and Computer Science, in any part of National Territoryand foreign countries.

§ 3º The organisation and functioning of the National Council ofInformation, Technology and Automation, CONIN, will be established by theExecutive Power.

§ 4º With the exception of that determined in the following § the durationof the term of office for non governmental members of the council will be of 3(three) years.

§ 5º The term of office for members of the council, in any case, will endwith the term of office of the President of the Republic who nominated them.

Art. 7º The National Council of Information, Technology andAutomation - CONIN, is responsible for:

I – advising the President of the Republic during the formulation of theNational Policy of Computer Science;

II - proposing, every 3 (three) years, the National Plan for ComputerScience and Automation to the President of the Republic, to be approved andannually evaluated by the National Congress, as well as supervising itsexecution;

III – establishing, in agreement with that ordered in the National Planfor Computer Science and Automation, (vetoed) specific resolutions andprocedures to be followed by the bodies of the Federal Administration;


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IV – following the strict observance of these standards at all times;

V – stating an opinion, beforehand, on the creation and reformulation ofbodies and entities, in the area of the Federal Government, regarding thecomputer science sector;

VI – stating a point of view regarding the concession of benefits, whetherfiscal, financial or of any other nature, by the bodies and entities of the FederalAdministration for projects of the computer science sector;

VII – establishing criteria for the compatibility of policies for the regio-nal/sector development, that affects the computer science sector, with theobjectives and principles as established by this Law, as well as measures destinedto promote the de-concentration of the regional economy;

VIII – establishing rules and standards for the homologation of computerscience goods and services and for the issuing of corresponding certificates,always taking into account the criteria followed by the pertinent technicalbodies;

IX – being aware of projects for treaties, agreements, conventions andinternational commitments of any nature, that refer to the computer sciencesector;

X – establishing standards for controlling the flow of cross-border dataand for the concession of channels and transmission vehicles of data forconnection to data banks and networks in foreign countries (vetoed);

XI – establishing measures, taking into account the rendering, by thestate, of adequate protection of individual and public rights, as regards theeffects of computerisation on the society, following that ordered in Art. 40;

XII – stating the criteria for the minimum curriculum for professionaldevelopment and the definition of careers to be adopted, regarding the activitiesof computer science, by the bodies and entities of the Federal Administration,Direct and Indirect, and the foundations under ministerial supervision;

XIII – deciding, at an appeal level, the questions arising from the decisionsof the Special Secretariat for Computer Science;

XIV – stating an opinion about the basic conditions of acts or contracts(vetoed) relative to the activities of computer science;


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XV – proposing to the President of the Republic the sending to the NationalCongress of the complementary legislative measures necessary for the executionof the National Policy for Computer Science; and

XVI – in accordance with the National Plan for Computer Science andAutomation, create Research, Technology and Computer Science Centres, inany part of the National Territory or in foreign countries.

SPECIAL SECRETARIAT FOR COMPUTER SCIENCE

Art. 8º It is of the responsibility of the Special Secretariat of ComputerScience – SEI, a subordinate body of the National Council of Information,Technology and Automation - CONIN: (Art. revoked with clauses by Law No.8.248, of 23/10/91)

I – to render services for technical and administrative support to theNational Council of Information, Technology and Automation, CONIN -CONIN;

II – enact, divulge, execute and perform the resolutions of the NationalCouncil of Information, Technology and Automation - CONIN, in agreementwith item III of Art. 7;

III – elaborate the proposal of the National Plan of Computer Scienceand Automation, submit it to the National Council of Information, Technologyand Automation and execute it in its area of jurisdiction, in agreement withitems II and III of Art. 7;

IV – adopt the necessary measures for the execution of the National Policyfor Computer Science as appropriate;

V – analyse and decide upon projects for the development and productionof computer science goods (vetoed); and

VI – to previously manifest itself regarding the importation of goods andservices for computer science for 8 (eight) years counting from the publicationdate of this Law, following that disposed in item III of Art. 7.

APPLICABLE MEASURES FOR ACTIVITIES OF COMPUTERSCIENCE

Art. 9º In order to assure adequate levels of protection for nationalcompanies, whilst they are not consolidated and capable of competing in theinternational market, observing differentiating criteria according to the


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peculiarities of each specific market segment, periodically re-evaluated, theExecutive Power shall adopt restrictions of transitory nature for the production,operation, commercialisation and importation of computer science goods andtechnical services. (Art. revoked with paragraphs by Law No. 8.248, of 23/10/91)

§ 1º With the exception of that stated in Art. 10, restrictions orimpediments cannot be adopted for the free practice of manufacturing,commercialisation and rendering of technical services in the sector of computerscience by national companies that utilise national technology, as long as theydo not benefit from fiscal and financial benefits.

§ 2º Equally, the caput restrictions of this Art. are not applied to goods(vetoed) of information science, with national technology whose manufacturingdoes not depend on the importation of parts, pieces and components of foreignorigin.

Art. 10. The Executive Power may establish limits for thecommercialisation, in the national market, of goods and services of computerscience, even for those produced in the Country, where they imply the creationof monopolies in sectors of the segment (vetoed).

Art. 11. The bodies and entities of the Public Federal Administration,Direct and Indirect, the institutional foundations or those maintained by PublicPower and other organisations, under the direct of indirect control of the Unionwill give preference to items produced by national companies when purchasinggoods and services of computer science. (Art. revoked with paragraphs by Law No.8.248, of 23/10/91)

Sole paragraph. Such preference is allowed when there is the satisfactorydelivery conditions, support for services, quality, standardisation, compatibilityand performance specifications, difference in price to similar imported productsat a percentage to be proposed by the National Council of Information,Technology and Automation - CONIN to the President of the Republic (vetoed).

Art. 12. For the intents and purposes of this Law, national companiesare those of legal constituted entity with headquarters in the country, whosecontrol is, in a permanent manner, exclusive and unconditionally, under theownership, direct or indirect, of individuals resident and domiciled in thecountry, or by entities of internal public law, being control understood as: (Art.revoked by paragraphs and clauses of Law No. 8.248, of 23/10/91)

I – ruling control: the practising, jure et de facto, of the power to electadministrators of the society and to direct the functioning of the departmentsof the company;


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II – technological control: the practising, jure et de facto, of power todevelop, generate, acquire, transfer and vary the technology of products and ofthe production process;

III – control of capital: the detention, directly or indirectly, of the totalityof the capital, with a direct effect on, or potential vote, at a minimum of 70%(seventy per cent) of the capital stock.

§ 1º In the case of publicly held corporations, the shares with rights tovote or to fixed or minimum dividends must correspond to, at a minimum, 2/3 (two thirds) of the capital stock and may only be the property of, or besubscribed or acquired by:

a) individuals, resident or domiciled in the Country, or entities of internalpublic law;

b) legal entities of public law, constituted and with headquarters andforum within the country, that meet the requirements as defined inthis Art. to be included as a national company;

c) legal entities of internal public law.

§ 2º The shares with right to vote or fixed or minimum dividends mustbe of nominative form.

Art. 13. The following incentives, grouped together or individually, maybe conceded to national companies so that they may perform projects forresearch, development and production of goods and services for computerscience, that meet the fixed proposals of Art. 19: (Art. revoked with clauses byLaw No. 8.248, of 23/10/91)

I – exemption or reduction until 0 (zero) of aliquots relevant to the ImportDuty in cases of importation that have no similar national ones:

a) of equipment, machines, apparatus and instruments, with respectiveaccessories, spare parts and tools;

b) of components, intermediary products, raw materials, parts and piecesand other supplies;

II – exemption of Export Taxes, in cases of exportation of homologatedgoods;

III – exemption or reduction until 0 (zero) of aliquots relevant to ExciseTax:


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a) assure suppliers of the goods mentioned in item I, imported or ofnational production, with the maintenance of tax credits regardingraw materials, intermediary products, parts and pieces and othersupplies utilised in the industrialisation process;

b) regarding final homologated products;

IV - exemption or reduction until 0 (zero) of Tax aliquots regarding CreditOperations, Exchange and Insurance and on Operations Relating to Titles andSecurities, that apply to the exchange operations linked to the payment ofimported goods and of contracts for the transfer of technology;

V – deduction up to the double, as an operational cost for the effects ofascertaining the Income Tax and Revenues of Other Natures, of expensesresulting from ones own programmes or those of third parties, previouslyapproved by the National Council of Information, Technology and Automation– CONIN, that has as its objective the research and development of goods andservices of the computer science sector or the development, training andimprovement of human resources for computer science activities;

VI – appreciated depreciation of goods destined to fixed assets;

VII – priority to direct financing by federal financial institutions, or ofindirect financing, by means of transferring administrative funds by thoseinstitutions, for the costing of investments for fixed assets, including goods offoreign origin where no similar national goods exist.

Art. 14. National companies, that perform or may perform, physical-chemical processes relevant to the manufacturing of electrical components forsemiconductor, optical-electronic and similar processes, as well as their supplies,involving techniques such as epitaxial growth, diffusion, ionic implantation orother similar or advanced processes, may be conceded, as decided by the Presidentof the Republic, additional incentives to those foreseen in the previous article,so as to benefit from a reduction in the taxable income, for the effects of IncomeTax, of a percentage equivalent to the gross income of these goods as presentedin the total income of the company. (Art. revoked with § by Law No. 8.248, of 23/10/91)

Sole paragraph. Equally so, as a further incentive to companies that usesupplies listed in the caput of this article, especially micro-electronic companies,it may be attributed the capacity to make double deductions to the acquisitionvalue of their taxable income.

Art. 15. National companies, that have approved projects for thedevelopment of software, of relevant interest to the productive system of the


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country, may be conceded the benefit of reducing their taxable income, for theeffects of Income Tax, at a percentage equal to the gross income of thecommercialisation of the software as represented in the total income of thecompany. (Revoked by Law No. 8.248, of 23/10/91)

Sole paragraph. (Vetoed).

Art. 16. The incentives foreseen by this Law will only be conceded toclasses of goods and services, within the criteria, limits and bands of applicationthat are expressively foreseen in the National Plan for Computer Science.(Revoked by Law No. 8.248, of 23/10/91)

Art. 17. Without affecting other conditions to be established by theNational Council of Information, Technology and Automation, CONIN,benefiting companies must invest in programmes for technological creation,development or adaptation, at a quantity corresponding to a percentage(vetoed) previously fixed at the time when the incentives were given, incidentalon the quarterly income from the commercialisation of goods and services ofthe sector, deducting transport and insurance expenses, when written separatelyon the fiscal documentation and when corresponding to current market prices.


Art. 18. The non fulfilment of the conditions established at theconcession of fiscal incentives will oblige the infringing company to fully collecttaxes that were exempt or where a reduction was granted, and that in otherways are fully due, monetarily corrected and with a fine of 100% (one hundredper cent) on the main updated amount. (Revoked by Law No. 8.248, of 23/10/91)

Art. 19. The criteria, conditions and time limit for the granting, in eachcase, of measures as stated in articles 13 to 15 will be established by the NationalCouncil of Information, Technology and Automation - CONIN, in agreementwith the unremitting policies of the National Plan for Computer Science andAutomation, aimed at: (Revoked Art. with clauses by Law No. 8.248, of 23/10/91)

I – the growing participation of national private companies;

II – so as to adequately attend the necessities of users that use the goodsand services of the sector;

III – the development of applications that have the best economical andsocial costs/benefit relations;

IV – the substitution of imports and the generation of exports;


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V – the progressive reduction in the final prices of goods and services;and

VI – the capacity for significant technological development.

Art. 20. Activities of stimulation will be directly performed by the creditinstitutions and public and private financing, observing the criteria establishedby the National Council of Information, Technology and Automation - CONINand the statutory resolutions of the institutions mentioned.

Art. 21. For the fiscal years of 1986 to 1995, inclusive, legal entities maydeduct up to 1% (one per cent) of their owed Income Tax, as long as theydirectly apply, until the single quota maturity date or last tax quota, an equalamount in new shares of national companies of private law that have as theirsole or main activity the production of goods and services of the computerscience sector, being prohibited to invest in applications of companies of one ormore economical conglomerates and/or companies that have not had theircapitalisation plans approved by the National Council of Information,Technology and Automation - CONIN. (Art. revoked by § of Law No. 8.248, of 23/10/91)

Sole paragraph. Any company under direct or indirect control of theUnion or of the States, currently existing or that may be created, cannot usethe benefits that are described in the present Law, neither take advantage ofother privileges.

Art. 22. (Vetoed) in the case of computer science goods and services,judged as being of relevant interest to the internal scientific and productiveactivities, and for which no company exists capable of meeting the effectivenecessities of the internal market, with own or foreign acquired technology,the production may be admitted in favour of companies that have not met therequirements of Art. 12, as long as the interested organisations: (Art. revokedwith clauses and paragraphs by Law No. 8.248, of 23/10/91)

I – have approved, by the National Council of Information, Technologyand Automation - CONIN, programmes for the effective qualification of theirtechnical body for product technologies and for production processes;

II – they are applied, within the country, in activities of research anddevelopment, directly or in convention with Centres of Technological Researchand Development aimed at the area of Computer Science and Automation orwith Brazilian universities, following priorities defined by the National Council of


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Information, Technology and Automation - CONIN, at a quantity correspondingto a percentage, as fixed within the National Plan of Computer science andAutomation, that applies to the gross income of each accounting period;

III – present a plan for exportation; and

IV – establish development programmes for local suppliers.

§ 1º The National Council of Information, Technology and Automation- CONIN will only authorise the foreign acquisition of technology when thereis a known interest of the market, and when no national company exists withthe technical ability to meet the demand.

§ 2º The requirements of this Art. do not apply to products and servicesof companies that, until the legal date of this Law, had already been producingand commercialising in the country, in agreement with projects approved bythe Special Secretariat of Computer Science - SEI (vetoed).

Art. 23. The producers of goods and services of computer science willguarantee the adequate technical quality of these goods and services to theirusers, any onus for proof of this quality will be of their exclusive responsibility.

§ 1º In agreement with the criteria to be fixed by the National Councilof Information, Technology and Automation - CONIN, the manufacturers ofmachines, equipment, subsystems, instruments and gadgets, produced in thecountry or of foreign origin, for the commercialisation on the internal market,are obliged to make known the technical information necessary for the inter-connecting or connection of these goods with those produced by other makersand the rendering of services, by third parties, for technical maintenance, aswell as to supply parts and pieces for 5 (five) years after discontinuing themaking of the product.

§ 2º The time limit and conditions foreseen in the former § will beestablished by regulation of the National Council of Information, Technologyand Automation - CONIN.

EXPORTATION DISTRICTS FOR COMPUTER SCIENCE

Art. 24. With the exception of the prevalent situations and, taking intoaccount the availability of corresponding technology within the country, theuse of foreign technology by companies that do not meet the requirements ofArt. 12 remain conditioned to:


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I – the production (vetoed) if exclusively destined for the foreign market;and

II – the production unit being located in one of the Computer ScienceExportation Districts.

Art. 25. Municipalities will be considered Computer Science ExportationDistricts (vetoed) if they are situated in the areas of SUDAM (Superintendencyfor the Development of the Amazon) and SUDENE (Superintendency for theDevelopment of the Northeast) for this purpose as indicated by the ExecutivePower and as nominated by the National Congress.

Art. 26. The production and exportation of goods for Computer Science,as well as for importation of their parts, pieces, accessories and supplies, in theComputer Science Exportation Districts, will be free from any Taxes regardingthe Exportation, regarding the Importation, (vetoed) regarding IndustrialisedProducts and regarding the closing of exchange operations.

Art. 27. The exportation of pieces, components, accessories and suppliesof national origin for use and industrialisation within the Computer ScienceExportation Districts, or for re-exportation to foreign countries, will be, for allfiscal effects relevant to current legislation, equivalent to Brazilian exports forforeign countries.

Art. 28. (Vetoed).

Art. 29. The convention terms remain ratified for the compatibility ofcomputer science and microelectronic procedures, in the Manaus Free-TradeZone, and for the rendering of services for technical and operational support,of 30 November of 1983, celebrated between the Superintendency of the ManausFree-Trade Zone - SUFRAMA and the Special Secretariat of Computer Science- SEI, with the intervention of the Technological Centre for Computer Scienceand the Centre for the Analysis of Industrial Production, that is an integratepart of this Law.

SPECIAL FUND FOR COMPUTER SCIENCE ANDAUTOMATION

Art. 30. (Vetoed ).


Art. 31. The National Council of Information, Technology andAutomation - CONIN, will annually approve the budget for the Special Fundof Computer Science and Automation, taking into account the plans and


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projects as approved by the National Council of Information, Technology andAutomation – CONIN, allocating resources to aims as specified in Art. 30.

TECHNOLOGICAL FOUNDATION CENTRE FORCOMPUTER SCIENCE

Art. 32. The Executive Power is authorised to establish the TechnologicalCentre for Computer Science - CTI, so as to stimulate the development ofscientific and technological research in the activities of computer science.

§ 1º The Centre, bound to the National Council of Information,Technology and Automation - CONIN, will benefit from having administrativeand financial autonomy and will acquire corporate entity from the time ofarchiving its constitutive act, its articles of association and the approving decree.

§ 2º the President of the Republic will designate a representative of theUnion for the constitutive acts of the Centre.

§ 3º The structure and functioning of the Centre will be governed by itsarticles of association as approved by the President of the Republic.

Art. 33. The objectives of the centre are to:

I – promote, by means of agreements, conventions and contracts withpublic and private institutions, to perform research, plans and projects;

II – issue technical reports;

III – follow nationalisation programmes, together with the appropriatebodies, in accordance with the guidelines of the National Council of Information,Technology and Automation - CONIN;

IV – perform support services to national companies of the computerscience sector;

V – implement a policy for the integration of Brazilian universities, bymeans of agreements, conventions and contracts, for the national effort todevelop our information science.

Art. 34. By means of the act of Executive Power, the assets and rightspertaining to, or destined to, the Technological Centre for Computer Sciencewill be incorporated into the Technological Centre for Computer Science.


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Art. 35. The patrimony of the Technological Centre for Computer Sciencewill be made up as follows:

I – resources arising from the Special Fund for Computer Science andAutomation, that have been allocated by the National Council of Information,Technology and Automation - CONIN;

II – budgetary allocations and subventions of the Union;

III – financial support and subventions that have been allocated by theStates and Counties, their autarchies, societies of mixed economy or publiccompanies;

IV – assets and rights of the Technological Centre for Computer Science;

V – remuneration of rendered services arising from agreements,conventions or contracts;

VI – eventual revenue.

Sole paragraph. During the institution of the Centre, the ExecutivePower will stimulate the participation of private resources into the patrimonyof the entity and in its current expenses, without the required necessity of thefinal part of letter b, of Art. 2, of Decree-Law No. 900 of 29 September, 1969.

Art. 36. The National Council of Information, Technology andAutomation, CONIN, will guarantee, where required, the incentives asmentioned in this Law, to the Technological Centre for Information.

Art. 37. The Technological Centre for Computer Science will manageits employees in accordance with labour legislation.

§ 1º The workers of the Technological Centre for Computer Science to belapsed, will have the right to be utilised as one of the employees of the Centre.

§ 2º The Centre may contract, within or outside of the country, theservices of companies or specialised professionals for the rendering of technicalservices, as a temporary measure, after consulting the National Council ofInformation, Technology and Automation - CONIN.

Art. 38. In the case of the Centre being lapsed, its assets will beincorporated into the patrimony of the Union.


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Art. 39. Expenses arising from the constitution, installation andfunctioning of the Technological Centre for Computer Science will be passedto the budgetary allocations currently consigned to the National SecurityCouncil, previously in favour of the Presidency of the Republic - National Councilof Information, Technology and Automation - CONIN or of others destinedto this cause.

FINAL RESOLUTIONS

Art. 40. (Vetoed).


Art. 41. (Vetoed).

§ 1º (Vetoed).

§ 2º (Vetoed).

§ 3º (Vetoed).

Art. 42. Without impairment to maintenance and improvement ofinstruments and mechanisms of industrial policy and services in the area ofComputer Science, in force at the time of publication for this Law, the NationalCouncil of Information, Technology and Automation – CONIN, will submitto the President of the Republic a proposal to adapt the rules and proceduresthat are in force to the precepts of this Law within 180 (one hundred andeighty) days.

Art. 43. Materials relevant to computer programmes and associatedtechnical documentation (software) (vetoed) and relative privacy rights, withrights to the personality, relevant to its range, will be subject to specific laws,to be approved by the National Congress.

Art. 44. The First National Plan for Computer Science and Automationwill be passed to National Congress within 360 (three hundred and sixty) daysfrom the publication date of this Law.

Art. 45. This Law will come into force 60 (sixty) days after its publication.

Art. 46. Any opposing resolutions are revoked.

Brasília, 29 October 1984; 163rd of Independence and 96th of the Republic.


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LAW Nº 9.609, 19 FEBRUARY 1998

It states about the protection of the intellectual propertyof a computer programme, its commercialisation in thecountry and sets other provisions.



Chapter I

PRELIMINARY PROVISIONS

Art. 1º A computer programme is the expression of an organised set ofinstructions in a natural or codified language, contained in a physical supportof any kind, which has to be used in automatic machines that deal withinformation, devices, peripheral equipment or instruments, based in digital oranalogous technique, to make them work both in and for determined ways.

Chapter II

PROTECTING THE AUTHOR’S RIGHTS AND THE REGISTRATION

Art. 2º The policy of protection to the intellectual property of a computerprogramme is the one awarded to the literary works by the legislation ofauthoring rights and connected ones in force in the country, taking into accountwhat is stated in this Law.

§ 1º The provisions related to moral rights do not apply to the computerprogramme, except for, at any time, the author’s right to demand the paternityof the computer programme and the author ’s right of opposing to non-authorised alterations when they imply in deforming, mutilating or any othermodification of the computer programme, which may damage the author’shonour or reputation.

§ 2º The protection of the rights related to a computer programme areassured for the period of fifty years, counting from the first of January of thefollowing year of its publication or, in its absence, of its creation.

§ 3º The protection to the rights dealt with by this Law does not dependon registration.

§ 4º The rights attributed by this Law are assured to foreigners domiciledabroad, provided the country of origin of the programme assures to Braziliansand foreigners domiciled in Brazil the equivalent rights.


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§ 5º That exclusive right of authorising or forbidding the commercial rentis included among the rights which are assured by this Law and by the legislationof authoring rights and connected ones in force in the Country, but this right isnot exhaustible by the sale, licence or any other form of transferring the copyof the programme.

§ 6º What is disposed on the previous § does not apply to the cases wherethe programme itself is not the essential object of the rent.

Art. 3º If it is the title-holder ’s wish, it may be possible to registercomputer programmes in the agency or organisation that will be nominatedby act by the Executive Power, by initiative of the Ministry in charge of thepolicy for science and technology.

§ 1º The request for registration that is settled in this Art. should have, atleast, the following information:

I – the data referring to the author of the programme and to the title-holder, in case he/she is different from the author, being them individuals orcompanies;

II – the identification and the functional description of the computerprogramme; and

III – the parts of the programme and other data that may be consideredenough to characterise its independent creation, safeguarding the rights of thirdparties and the responsibility of the Government.

§ 2º The information referred to in sub-§ III of the previous § isconfidential, and cannot be revealed, safe by judicial order or upon request ofthe title-holder.

Art. 4º Safe contrary provision, the rights relating to the computerprogramme will belong exclusively to the employer, the person hiring servicesor public agency, when the programme has been developed and made while acontract was still in force or during any other by-law link, and it is solely destinedto research and development, or when the activity of the employee, hired forservice or servant is foreseen, or even, when it is due to the own nature of theconcerning commissions to these links.

§ 1º Safe contrary agreements, the compensation for the work or renderedservice should be limited to the remuneration or to the agreed salary.


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§ 2º When a computer programme has been made without having relationto the employment contract, rendered services or by-law links, and withoutusing resources, technological information, industrial and business secrets,materials, installations or equipment which belong to the employer, to thecompany or organisation with which the employee has an agreement forrendering services or public agency, the rights concerning this computerprogramme will belong exclusively to the employee.

§ 3º The treatment foreseen in this Art. will be applied in the cases wherepeople with scholarships, trainees and similar ones have developed the computerprogramme.

Art. 5º The rights about the authorised derivations made by the title-holder of the computer programmes, including their economic exploration,will belong to the authorised person who will make them, unless the contraryis stated in a contract.

Art. 6º These do not offend the rights of the title-holder of the computerprogramme:

I – reproduction, in a sole sample, of a legitimately bought copy, providedthis is meant to be the backup or electronic storage copy, in which case theoriginal sample serve as backup.

II – the partial quotation, for didactic purposes, provided both theprogramme and the title-holder of the respective rights are identified;

III – the existence of similarity of a programme to another pre-existingone, when this happens due to functional characteristics of its application, tothe fulfilment of normative and technical precepts, or to the limitation of analternative way for expressing it;

IV – the integration of a programme, keeping its essential characteristics,to an applicative or operational system that is technically indispensable to theuser’s needs, provided it is for the exclusive use of whoever has promoted it.

Chapter III

WARRANTIES TO USERS OF COMPUTER PROGRAMMES

Art. 7º The contract that allows the use of the computer programme,the corresponding fiscal document, the physical supports or the respectivepackages should state the technical due date of the commercialised version, insuch a way that can be easily read by the user.


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Art. 8º Whoever commercialises computer programmes all over thecountry and within the technical due date of the respective version, be it thetitle-holder of the programme or the title-holder of the commercialisation rights,has the obligation to assure the respective users the rendering of complementarytechnical services related to the adequate working of the programme, takingits specifications into account.

Sole Paragraph – the obligation will continue in case of taking thecomputer programme out of circulation during its due date period, safe for fairindemnity of possible damage caused to third parties.

Chapter IV

LICENCE AGREEMENTS FOR THE USE, COMMERCIALISATION ANDTRANSFERRENCE OF TECHNOLOGY

Art. 9º The use of a computer programme in the Country will be objectof a licence agreement.

Sole paragraph. In case the contract referred to in the caput of this Art.does not exist, the fiscal document related to the purchase or licensing of thecopy will be used to prove the regularity of its use.

Art. 10. The acts and licence agreements for commercialisation rightsreferring to computer programmes of a foreign origin should state, as far astaxes and demandable charges are concerned, the responsibility for the respectivepayments and should set the salary of the title-holder of the computerprogramme, who is domiciled abroad.

§ 1º The following clauses will be considered null if they:

I – limit the production, distribution or the commercialisation, thusviolating the normative provisions in force;

II – exempt any of the contractors of the responsibilities for any possibleactions of third parties, due to vices, faults or violation of the right of “auto”.

§ 2º The sender of the corresponding value in foreign currency, as paymentof the applicable remuneration, will keep all the necessary documents to provethe fairness of the remittances and of their conformity to the caput of this Art.for the period of five years.

Art. 11. In the cases of transfer of technology of computer programmes,the National Institute of Industrial Property will register the respectiveagreements so that they take effect in relation to third parties.


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Sole paragraph. For registering in accordance to this article, it is necessaryto deliver, from the supplier to the technology receptor, the completedocumentation, specially the commented code-source, descriptive memorial,internal functional specifications, diagrams, flow charts and other technicaldata necessary for absorbing the technology.

Chapter V

INFRACTIONS AND PENALTIES

Art. 12. Violating the computer programme author’s rights:

Penalty – Imprisonment from six months up to two years or fine.

§ 1º If the violation consists of reproducing, by any means, a computerprogramme, as a whole or in part, for commercial purposes, without the expressauthorisation of the author or whoever is his/her representative:

Penalty – Seclusion from one to four years and fine.

§ 2º Whoever sells, puts on display for sale, brings to the country, buys,hides or has in stock, for commercial purposes, the original or the copy of acomputer programme, produced with violation of authoring rights, incurs intothe same penalty of the previous paragraph.

§ 3º For the crimes foreseen in this article, one only proceeds throughcomplaint, safe:

I – when they are practised causing damage to a public law entity,autarchy, public company, mixed economy corporation or a foundationestablished by the public:

II – when due to a criminal act, it results in tax dodging, loss of taxcollection or the practise of any of the crimes against the tax order or againstthe consumption relations.

§ 4º In the case of sub-§ II in the previous paragraph, the liabilities of tax,or social contribution and any fixture, it will be prosecuted regardless of therepresentation.

Art. 13. The penal action and the preliminary diligence of search andseizure, in the cases of violation of computer programme author’s rights, willbe preceded by inspection and the judge may order the seizure of the copies


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produced or commercialised with violation of the author’s rights, their versionsand derivations, in the hands of the infringer or whoever is displaying them,keeping them in stock, reproducing or commercialising them.

Art. 14. Regardless of the penal action, the person who suffered the losswill be able to bring an action against the infringer to prohibit him/her topractise the criminal act, with the imposition of monetary penalty for the caseof transgression of the principle.

§ 1º The action of abstention of the practise of the act may be cumulatedwith the one of damage and loss for the damages due to the infraction.

§ 2º Regardless of preparatory preventive measures, the judge may give atemporary restraining order prohibiting the infringer to practise the criminalact, in the terms of this article.

§ 3º In the procedures, the preventive civil measures of search and seizurewill observe what was stated in the previous article.

§ 4º In case information characterised as confidential, is presented incourt for the defence of the interests of any of the parts, the judge will have todetermine that the process proceeds in justice secret, and the use of suchinformation is forbidden to the other part for any other purposes.

§ 5º Whoever requests or promotes the measures foreseen in this and inthe previous article, acting by misdeed or by envy, perversity or gross error willbe responsible for the damage and loss, in the terms of articles 16, 17 and 18 ofthe Code of Civil Procedure.

Chapter VI

FINAL PROVISIONS

Art. 15. This Law will be in force counting from the date of itspublication.

Art. 16. Law n.7.646, from 18 December 1987 is deprived of effect.

Brasília, 16 February 1998; 177th. Year of Independence and 110th. Year ofRepublic.

Fernando Henrique CardosoJosé Israel VargasPublished in D.O.U. on 20.02.98, Section I, First Page.


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LAW Nº 9.610, 19 FEBRUARY 1998

Alters, updates and consolidates the legislation aboutauthoring rights and sets other provisions.



I


Art. 1º This Law regulates authoring rights, and this denominationcomprehends the rights of the author and those which are connected to them.

Art. 2º Foreigners domiciled abroad will have the protection granted inthe agreements, conventions and treaties in force in Brazil.

Sole paragraph. The dispositions of this law suit the national citizensor people living in a country that grants to Brazilians or people living in Brazilthe reciprocity in the protection to authoring rights or their equivalent.

Art. 3º Authoring rights are considered as movable properties, for legaleffects.

Art. 4º Juridical businesses are interpreted restrictively about authoringrights.

Art. 5º For the effects of this Law, it is considered:

I - publication – the offering of literary, artistic or scientific work to theknowledge of the public, with the author’s consent, or any other title-holderof author’s right, by any means or process;

II – transmission or emission – the dissemination of sounds or of soundsand images, by means of radio-electric waves; satellite signals; wire, cable orother conductor; optical means or any other electromagnetic process;

III - retransmission – simultaneous emission of the transmission from acompany by another;

IV - distribution – allocation to the public of the original or copy of literary,artistic or scientific works, interpretations or arranged executions andphonograms, by means of sale, rental or any other means of transfer of propertyor ownership;


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V – communication to the public – act in which the work is made availableto the public by any means or procedure that do not consist of the distributionof samples;

VI – reproduction – the copy of one or more samples of a literary, artisticor scientific work or of a phonogram, in any tangible way, including anypermanent or temporary storage by electronic means or any other means offixation that may be developed;

VII - forgery – non-authorised reproduction;

VIII - work:

a) in co-authorship – when it is created in common, by two or moreauthors;

b) anonymous – when the author’s name is not stated, either by his/herwill or because he/she is unknown;

c) pseudonym – when the author hides him/herself by a presumed name;d) unpublished – which has not been published;e) posthumous – which is published after the author’s death;f) originating – primordial creation;g) derivative – the one that being a new intellectual creation is the result

of the transformation of an originating work;h) collective – the one created by the initiative, organisation and

responsibility of a legal or personal entity, that has it published undertheir name or mark and it is constituted by the participation of differentauthors, whose contributions are blended in an autonomous creation;

i) audio-visual – the one that results from the fixation of images with orwithout sound, which aims at creating the idea of movement bymeans of their reproduction independently of the processes of receivinga broadcast, of the support used initially or afterwards to fix it, oreven of the means used for its transmission;

IX - phonogram – all the fixation of sounds of a performance orinterpretation or of other sounds, or of the representation of sounds which isnot a fixation included in an audio-visual work;

X - editor – the individual or legal entity to whom is attributed theexclusive right of the reproduction of the work and the obligation to divulge it,within the limits foreseen in the publishing contract;

XI - producer – the individual or legal entity who takes the initiative andhas the economical responsibility of the first fixation of the phonogram or theaudio-visual work, whatever the nature of the support;


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XII – radio broadcasting – wireless transmission, inclusive by satellites,of sounds or images and sounds or their representations, for the reception tothe public and the transmission of codified signals, when the decoding meansare offered to the public by the broadcasting organisation with or withouttheir consent;

XIII – artists, both interpreters or performers – all the actors, singers,musicians, ballet dancers or other people who perform a role, sing, recite, read,interpret or perform in any way literary or artistic works or folklore expressions.

Art. 6º The Union, the States, the Federal District or the Districts willnot have the dominion of the works they sponsor.

II

INTELLECTUAL WORKS

Chapter I

PROTECTED WORKS

Art. 7º The creations of the spirit expressed by any means or fixed inany kind of support, tangible or intangible, known or which may be inventedin the future, are protected intellectual works, such as:

I – the texts from literary, artistic or scientific works;

II – the conferences, allocutions, sermons and other works of the samenature;

III – the drama and musical-drama works;

IV – choreographies and pantomimes, whose performances are fixed in awritten or in any other form;

V – musical compositions, with or without lyrics;

VI – audio-visual works, with or without sound, inclusive thecinematographic ones;

VII – photographic works and the ones produced by any process similarto photography;

VIII – the works that include drawing, painting, printing, sculpture,lithography and kinetic art;


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IX – illustrations, maps and other works of the same nature;

X – projects, sketches and plastic works concerning geography,engineering, topography, architecture, landscaping, staging and science;

XI – adaptations, translations and other transformations in original works,presented as a new intellectual creation;

XII - software;

XIII – collectanea or compilations, anthologies, encyclopaedias,dictionaries, data base and other works which, by their selection, organisationor content disposition, may constitute an intellectual creation.

§ 1º Software is the subject of specific legislation, provided it follows theprovisions of this Law which are applicable.

§ 2º The protection given in subparagraph XIII does not encompass thedata or materials themselves and is understood without prejudice to anyauthoring rights which may subsist regarding the data or materials within theworks.

§ 3º In the sciences domain protection will fall on the literary or artisticform, not encompassing their scientific or technical content, without prejudiceto the rights that protect the other fields of immaterial property.

Art. 8º The following are not subject to protection, as authoring rights,which is the scope of this Law:

I – the ideas, normative procedures, systems, methods, projects ormathematical concepts as such;

II – plans or rules to perform intellectual acts, games or business;

III – blank forms to be filled in by any kind of information, scientific ornot, and their instructions;

IV – the texts of treaties or conventions, laws, decrees, regulations,judgement and other official acts;

V – the information used by everyone, such as calendars, diaries, referencefiles or subtitles;


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VI – the names and isolated titles;

VII – industrial or commercial utilisation of ideas contained in the works.

Art. 9º The same protection that is given to the original work, is assuredto the copy which is made by the author himself.

Art. 10. The protection to the intellectual work includes its title, iforiginal and unmistakable with the title of a work in the same gender, previouslydivulged by another author.

Sole paragraph. The name of periodical publications, inclusive newspapers,is protected for the period of one year after the release of its last issue, unlessthey are annual, in which case this period is extended to two years.

Chapter II

AUTHORING OF INTELLECTUAL WORKS

Art. 11. Author is the individual who creates literary, artistic or scientificwork.

Sole paragraph. The protection given to the author may be given tolegal entities in the cases foreseen in this Law.

Art. 12. In order to identify him/herself as author, the creator of theliterary, artistic or scientific work, may use his civil name, complete or shortenedeven by his/her initials, his/her pseudonym or any other conventional sign.

Art. 13. It is considered as the author of the intellectual work, providedthere is no evidence to say the opposite, the one who has, by one of theidentification means referred to in the previous Art. and according to the use,this quality indicated or announced in its use.

Art. 14. It is the title-holder of author rights the person who adapts,translates, makes musical arrangements and orchestration of works of publicdomain, not having the right to oppose to another adaptation, musicalarrangement, orchestration or translation, unless it is the author’s copy.

Art. 15. Co-authoring of the work is attributed to the ones in whosename, pseudonym or conventional sign is used.

§ 1º The person, who simply helped the author in the production of theliterary, artistic or scientific work, revising it, updating it, as well as checking


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or guiding its publishing or presentation by any means, is not considered as co-author.

§ 2º All the faculties inherent to the creation of an individual work areassured to the co-author, whose contribution may be used separately, but theuse that may lead to prejudice to the exploration of the common work isforbidden.

Art. 16. The author of the subject or literary, musical or literary-musicalargument and the director of the audio-visual work are co-authors.

Sole paragraph. The ones who create the drawings used in the audio-visual work are considered as co-authors of cartoons.

Art. 17. The protection to the individual participation in collective worksis ensured.

§ 1º Any of the participants, on behalf of their moral rights, may forbidthat their name is announced or indicated in the collective work, without lossof the right to receive the agreed remuneration.

§ 2º The title-holding of property laws on the assemblage of the collectivework belongs to the organiser.

§ 3º The contract with the organiser will specify the participant’scontribution, the deadline for delivery or achievement, the remuneration andother conditions for its accomplishment.

Chapter III

REGISTERING INTELLECTUAL WORKS

Art. 18. The protection to the rights dealt with by this Law does notdepend on the register.

Art. 19. It is the author’s option to register their work in the publicagency defined in § and in sub§ 1 of Art. 17 from the Law nº 5.988, from 14December, 1973.

Art. 20. For the registering services foreseen in this Law a retributionwill be charged, whose value and collecting process will be determined by anact of the title-holder of the federal public administration agency to which theregistration of the intellectual works is linked.


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Art. 21. The registering services dealt with by this Law will be organisedin accordance to what is stated in sub§ 2 of Art. 17 from the Law Number5.988, from 14 December, 1973.

III

THE AUTHOR’S RIGHTS

Chapter I


Art. 22. The author holds the moral and patrimonial rights of the workthey have created.

Art. 23. Co-authors of an intellectual work will carry out their rights,by mutual agreement, except for contrary covenant.

Chapter II

THE AUTHOR’S MORAL RIGHTS

Art. 24. These are the author’s moral rights:

I – to claim, at any time, the authorship of the work;

II – to have their name, pseudonym or conventional sign indicated orannounced as being the author’s, when their work is being used;

III – to keep the work unpublished;

IV – to ensure the integrity of the work, by opposing to any modificationsor to the practice of acts that in any way may damage or affect them as anauthor, in their reputation or honour;

V – to modify the work, before or after being used;

VI – to withdraw the work from circulation, or to suspend any previouslyauthorised form of use, when the circulation or use imply offence to theirreputation and image;

VII – to have access to a sole and rare specimen of the work, when itlegitimately belongs to someone else, in order to preserve its memory, by means


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of photographic or similar process, or audio visual, in such a way that it is theleast inconvenient possible to its holder, who, in any case, will be paid for anydamage or loss this may have caused them;

§ 1º Upon the author’s decease, the rights referred to in subparagraphs Ito IV, will be passed to their successors.

§ 2º It is due to the State to defend the integrity and authorship of awork in public dominion.

§ 3º In the case of subparagraphs V and VI, the previous compensationspaid to the others should be safeguarded, when applicable.

Art. 25. It falls on to the director, exclusively, the practice of moralrights on the audio-visual work.

Art. 26. The author may reject the authorship of an architectural projectwhich has been altered without their consent, during the execution or after theconclusion of the building.

Sole paragraph. The owner of the building site is responsible for thedamage caused to the author whenever, after the rejection, the rejected projectis considered to be the author’s work.

Art. 27. The author ’s moral rights are inalienable and cannot berenounced.

Chapter III

THE AUTHOR’S PATRIMONIAL RIGHTS AND THEIR DURATION

Art. 28. It falls to the author the exclusive right to use, to have thebenefit and to dispose of the literary, artistic or scientific work.

Art. 29. The use of the work depends on the author’s previous andexpress authorisation, in any forms, such as:

I – partial or integral reproduction;

II – the edition;

III – the adaptation, the musical arrangement and any othertransformations;


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IV – the translation to any language;

V – the inclusion in phonogram or audio-visual production;

VI – the distribution, when not inherent to the contract signed by theauthor with third parties for the use and exploration of the work;

VII – the distribution for offering of works or productions by means ofcable, optical fibre, satellite, waves or any other system that allows the user tomake the selection of the work or production to receive it at a time and placepreviously determined by the person who formulates the demand, and in thecases where the access to the works or production is done by any system thatmeans payment done by the user;

VIII – the direct or indirect use of the literary, artistic or scientific work,by means of:

a) representation, recitation or declamation;b) musical execution;c) use of loudspeakers or similar systems;d) radio or television broadcasting;e) reception of transmission of radio broadcasting in places of collective

attendance;f) background music;g) audio-visual, cinematographic display or by any similar process;h) use of artificial satellites;i) use of optical systems, telephone wires or not, cables of any kind and

similar means of communication that may be adopted;j) exhibition of works of art;

IX – the inclusion in database, the storage in computer, microfilmingand the other forms of filing;

X – any other existing forms of use or that may be invented.

Art. 30. In the exercise of the right of reproduction, the title-holder ofthe authoring rights can make the work of art available to the public, in theform, place or time h/she wishes, on a onerous or gratuitous basis.

§ 1º The reproduction right of exclusivity will not be applicable when itis temporary and when it just has the purpose of making the work of art,phonogram or rendition perceptible in the electronic media or when it is of atransient or circumstantial nature, as long as it happens, during the rightlyauthorised course of use by its title-holder.


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§ 2º In whatever mode of reproduction, the number of specimen will beinformed and controlled, and whoever reproduces the work of art has the dutyof keeping registries that enable the author to inspect the economic use of itsexploitation.

Art. 31. The several modalities of use of literary, artistic or scientificworks of art or phonograms are independent among themselves, and theauthorisation granted by the author, or by the producer, respectively, does notextend to any of the others.

Art. 32. When a work of art, made in a co-authoring regimen, is notdivisible, none of the co-authors can publish or authorise its publication withoutthe consent of the others, running the risk of being indemnified for damagesand loss, unless in the case of a collection of his/her complete works.

§ 1º In case of disagreement, the co-authors will decide by majority.

§ 2º To the dissident co-author is guaranteed the right not to contributeto the publishing expenses, renouncing his/her part of the profits, and theright to veto the inclusion of his/her name in the work.

§ 3º Each co-author can register the work themselves or defend theirown rights against third parties, without the compliance of the others.

Art. 33. Nobody can reproduce a work of art, which does not belong tothe public dominion, with the excuse of making annotations to it, commentingon it or improving it, without the permission of the author.

Sole paragraph. The commentaries or annotations can be publishedseparately.

Art. 34. The missives, which publication is conditioned to the author’spermission, may be attached as documents of proof in administrative or judici-al proceedings.

Art. 35. Having the author given the work of art its definite final versionas a result of revision, their heirs will not be allowed to reproduce the precedingversions.

Art. 36. The rights to the economic use of the writings published in thedaily or periodic press, with the exception of the signed ones or the ones whichpresent a lien, belong to the editor, unless otherwise established.


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Sole paragraph. The authorisation for the economic use of signed articlesfor publication in dailies or periodicals, does not extend its effects beyond thegiven period of time of periodicity, accreted of twenty days counting from itspublication, at which end the author regains their right.

Art. 37. The acquisition of the originals of a work of art, or of a sample,does not confer to the acquirer any of the patrimonial rights, unless otherwiseestablished among the parties and in the cases foreseen in this law.

Art. 38. The author cannot renounce or alienate rights to perceive aminimum of five per cent of the increase of the price, eventually verifiable ineach resale of the work of art or manuscript, being them originals, which h/shehas alienated.

Sole paragraph. In case the author does not perceive their rights followingthe act of resale, the salesperson is considered the trustee of the amount owedto them, unless the operation was carried out by an auctioneer, in which casethis will be the trustee.

Art. 39. The patrimonial rights of the author, except for the returnsresulting from its exploitation, are not shared, except for pre-nuptial pactagreements to the contrary.

Art. 40. When dealing with anonymous or pseudonymous works of art,whoever publishes it, will have the duty to exercise the patrimonial rights ofthe author.

Sole paragraph. The author, who makes themselves known, willundertake the exercise of the patrimonial rights, except for the rights acquiredby third parties.

Art. 41. The patrimonial rights of the author endure for seventy years,as from January 1st of the year following their death, obeying the line ofsuccession under the civil law.

Sole paragraph. The period of time of protection, which the caput ofthis Art. refers to, is applicable to the posthumous works of art.

Art. 42. When a literary, artistic or scientific work of art made in co-authorship regimen, is indivisible, the period of time foreseen in the previousarticle, will be counted as from the death of the last of the surviving co-authors.

Sole paragraph. To the rights of the surviving heirs will be added therights of the co-author who leaves no heirs.


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Art. 43. The period of protection of the patrimonial rights of anonymousand pseudonymous works of art will be of seventy years, as from January 1st ofthe year immediately following its publication.

Sole paragraph. The established in art. 41 and its Sole Paragraph will beapplicable, whenever their author makes themselves known before the statedterm foreseen in the caput of this article.

Art. 44. The period of protection of the patrimonial rights of audio-visual and photographic works of art will be of seventy years, as from January1st of the year following its disclosure.

Art. 45. Besides the works of art in relation to which the period of time ofprotection of the patrimonial rights lapsed, belong to the public dominion:

I. the ones of deceased authors who have left no heirs;

II. the ones of unknown authors, except for the legal protection to theethnic and traditional knowledge.

Chapter IV

LIMITATIONS OF THE AUTHORING RIGHTS

Art. 46. It does not constitute offence to the authoring rights:

I. the reproduction:

a) in the daily or periodical press, of news or informative article, publishedin dailies or periodicals, mentioning the name of the author, if signed,and of the publication from where they were transcribed;

b) in dailies and periodicals, of speeches given in public meetings of anynature;

c) of pictures, or of any other form of representation of images, whetherconsigned or not, when made by the owner of the consigned object,not having the opposition of the person pictured in them or of theirheirs;

d) of literary, artistic or scientific works of art, for the exclusive use ofthe visually disabled, whenever the reproduction, without commercialviews, is made using the Braille system or any other procedure whichgive support to aforesaid mentioned;

II. the reproduction, in one sample only of small passages, for the privateuse of the copyist, as long as it is done by the latter and with no commercialview;


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III. the mention in books, newspapers, magazines or in any other meansof communication, of passages of any work of art, with the purpose of study,criticism or polemics, in the justified measure to achieve its aim, indicating theauthor’s name and the origin of the work of art;

IV. The partial or integral publication of a summary of the lessons givenat any educational institution by whom they are aimed at, without the expressprevious authorisation of whoever gave them, is forbidden;

V. the use of literary, artistic or scientific works of art, phonograms andthe radio and television broadcast in commercial establishments, with theexclusive view of demonstrating to its clientele, as long as they commercialisethe support or equipment which will enable its use;

VI. the theatrical representation or musical performance, when carriedout in the family retreat or in the educational institutions with purely didacticaims, not having in either case, the purpose of profit;

VII. the use of literary, artistic or scientific works of art in order to producejudicial or administrative proof;

VIII. the reproduction, in whichever works of art, of small passages ofpre-existing works of any nature, or of an integral work, when of fine arts,whenever the reproduction in itself is not the main purpose of the new work ofart, and that is does not harm the normal exploitation of the work of artproduced, nor does it bring unjustifiable loss to the legitimate interests of theauthors.

Art. 47. The paraphrases and parodies, when not faithful reproductionsof the original work of art, and when it does not it imply discredit, are free

Art. 48. The words of art situated permanently in public places can bereproduced freely, through paintings, drawings, photography and audio-visualprocedures.

Chapter V

TRANSFERENCE OF THE AUTHOR’S RIGHTS

Art. 49. The author’s rights may be totally or partially transferred tothird parties, by themselves or by their heirs, on a universal or singular basis,personally or through representatives with special powers, by means of licensing,


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concession, assignment or through other means accepted by the Law, obeyingthe following limitations:

I. the total transmission comprises all of the author’s rights, except forthe ones of a moral nature and the ones expressly excluded by law;

II. the total and definite transmission of the rights will only be allowedin face of contractual written stipulation;

III. in the case of not having a contractual written stipulation, themaximum deadline will be of five years;

IV. the assignment will only be valid in the country where the contractwas signed, unless otherwise stipulated;

V. the assignment will only come about for the mode of use alreadyexisting at the date of the contract;

VI. not having specifications as far as the mode of use, the contract willbe interpreted restrictively and being understood as limited only the one whichwill be that indispensable to the fulfilment of the contract’s purpose.

Art. 50. The total or partial assignment of the author’s rights, which ispresumed onerous, will always be made in written.

§ 1º The assignment can be annotated on the margin of the registry towhich the art. 19 of this Law refers, or, the work of art is not registered, theinstrument can be registered in the Public Records.

§ 2º The essential elements, such as its object and the conditions of theexercise of Law as far as time, place and price, will be part of the assignmentinstrument.

Art. 51. The assignment of the author’s rights over future works willcover a maximum period of five years.

Sole paragraph. The stated term will be reduced to five years wheneverundetermined or greater, and the stipulated price will be proportionallydecreased.

Art. 52. The omission of the author ’s name, or of the co-author’s, at thetime of the divulging of the work does not presuppose anonymity or theassignment of its rights.


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TITLE IV

USE OF INTELLECTUAL WORKS OF ART AND OF THEPHONOGRAMS

Chapter I

EDITION

Art. 53. In face of an edition contract, the editor is in charge of thereproduction and the divulging of the literary, artistic or scientific work, and isalso authorised, on an exclusivity basis, to publish and to divulge it for theduration and under the conditions agreed with the author.

Sole paragraph. In every sample of the work, the editor shall mention:

I. the title of the work and its author;

II. in case of translation, the original title and the translator’s name;

III. the year of its publication;

IV. their name or trademark which identifies them.

Art. 54. The author may be obliged to make a literary, artistic or scientificwork under the same contract, and the editor will make every effort towardsits publication and divulging.

Art. 55. In the case of the author’s death or impediment to finish thework, the editor may:

I. consider the contract terminated, even if a considerable part of thework has been handed in;

II. edit the work as autonomous, by means of proportional payment ofthe price;

III. commission another to finish it, as long as the heirs give their consentand that this fact is mentioned in the edition.

Sole paragraph. Its partial publication is prohibited, if it was theauthor’s will only to publish as a whole or if their heirs decided otherwise.

Art. 56. It is understood that the contract treats only of one edition,unless otherwise established.


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Sole paragraph. When nothing is mentioned in the contract, it isconsidered that each edition is constituted of three thousand copies.

Art. 57. The price of payment will be settled by arbitration, based oncommon law, whenever there is no express stipulation in the contract by theauthor.

Art. 58. If the originals were not handed in, in accordance with whatwas agreed upon and the editor does not refuse them in the thirty days thatfollow its receiving, the changes made by the author will be considered asaccepted.

Art. 59. Whichever the conditions of the contract, the editor is obligedto disclose to the author the examination of the accounts for the part whichcorresponds to them, as well as keep them informed about the progress of theedition.

Art. 60. It is of the competence of the editor to establish a market price. He cannot however, raise it to the point of hindering the circulation of thework.

Art. 61. The editor will be obliged to render monthly accounts to theauthor, whenever their payment is conditioned to the sales of the work, exceptfor a stated term agreed upon differently.

Art. 62. The work shall be published within two years of the celebrationof the contract, unless a different stated term was otherwise stipulated.

Sole paragraph. The non-editing of the work within the legal or con-tractual stated term can lead to a breach of contract, being the editor responsiblefor the damages caused.

Art. 63. While the editions, to which the editor is entitled, have notbeen sold out, the author will not be able to dispose of their work and theburden of proof falls to the editor.

§ 1º During the validity of the contract of edition, the editor is entitledthe right to demand the withdrawal from circulation of an edition of the samework made by somebody else.

§ 2º An edition is considered sold out when there are fewer issues thanten per cent of the total edition in stock, in the hands of the editor.


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Art. 64. The editor will only be able to put on sale the remainder issues,one year after the launching of the edition, as long as the author is notifiedthat, within the period of thirty days, they will have priority in the acquisitionof the referred issues and for the sales price.

Art. 65. When the edition is sold out, and despite the editor’s beingentitled to another, does not publish it, the author may notify themselves todo it within a limited period of time, under the penalty of losing that right, andbeing liable for damages caused.

Art. 66. The author has the right to make amendments and alterations,which he finds fit, to the successive editions of their works.

Sole paragraph. The editor may oppose the alterations which mightharm their interests, offend their reputation or increase their responsibility.

Art. 67. If the updating of a work in the forthcoming editions isindispensable, due to its nature, and the author refuses to carry it out, theeditor may commission somebody else to do it, mentioning the fact in theedition.

Chapter II

COMMUNICATION TO THE PUBLIC

Art. 68. Without the previous and express authorisation of the authoror title-holder, theatrical works, musical or literary-musical pieces andphonograms will not be able to be used in public executions and presentations.

§ 1º The use of theatrical works such as dramas, tragedies, comedies,operas, operettas, ballets, pantomimes and the like, with or without music,having the participation of artists, paid or not, in public places or through radioor television broadcasts and cinematic shows are considered publicrepresentations.

§ 2º The use of musical or literary-musical pieces, with the participationor artists, whether or not paid, or the use of phonograms and audio-visualwords, in public places, whatever the processes, inclusive radio or televisionbroadcasts or transmissions whatever the mode, and cinematic shows areconsidered public executions.

§ 3º The following are considered public places as far as performances,executions or broadcasts are concerned: theatres, cinemas, ballrooms or concerthalls, night clubs, pubs, bars or associations of any nature, shops, commercialand industrial establishments, stadiums, circuses, fairs, restaurants, hotels,motels, clinics, hospitals, public administrative buildings, foundations, land,


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air or sea passenger transportation, or wherever literary, artistic or scientificworks are performed, executed or broadcast.

§ 4º The manager/impresario shall present at the central office, as foreseenin the art. 99, proof of the payment related to the authoring rights, prior topublic performance.

§ 5º When payment depends on the public ‘ s attendance, the managermay through an agreement with the central office, pay the price after the publicperformance.

§ 6º The manager will hand in a complete list of the works andphonograms used, indicating the names of the respective authors, artists andproducers, immediately after the public performance or broadcast.

§ 7º The cinematic and radiobroadcasting companies will promptly makeavailable for the interested ones, an authenticated copy of the individual andcollective contracts, settlements and agreements, authorising and regulatingthe payment per public performance of musical pieces and phonograms whichare part of their programmes or audio-visual works.

Art. 69. The author, in respect to the local usage, will notify the managerof the period of time of the executions and presentations, except for previousconventional stipulation.

Art. 70. The author has the right to oppose to presentations andexecutions, which have not been sufficiently rehearsed, as well as supervise it,having for such, free access to the presentations or executions, in the placewhere they will be held.

Art. 71. The author of the work is not allowed to change its essence,without an agreement with the manager, who is responsible for it.

Art. 72. The manager is not allowed to hand in the work to a strangeperson to the presentation and performance, without the author ’s permission.

Art. 73. The main performers, as well as the orchestra and choir directors,chosen by common consent by the author and producer, cannot be substitutedby order of the latter without the consent of the former.

Art. 74. Upon the authorisation of its translation or adaptation, theauthor of a theatrical work will be allowed to determine a stated term for itsuse in public presentations.


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Sole paragraph. After the lapse of time to which this Art. refers to, thetranslator or the person in charge of its adaptation, will not be able to opposeto the use of another authorised translation or adaptation, except if it is a copyof theirs.

Art. 75. Having the presentation of a theatrical work, made on a co-authorship basis, being authorised, none of its co-authors may revoke the givenauthorisation, without leading to the suspension of the season settled bycontract.

Art. 76. The share in the results of the shows reserved for the authorand artists is incapable of being pawned.

Chapter III

USE OF THE FINE ARTS WORK

Art. 77. Unless otherwise agreed, the author of a fine arts work, uponalienating the object on which it materialises, transfers the right to exhibit it,but does not transfer to the acquirer the right to reproduce it.

Art. 78. The authorisation to reproduce a fine arts work, by whicheverprocess, should be made in writing and is presumed onerous.

Chapter IV

USE OF A PHOTOGRAPHIC WORK

Art. 79. The author of a photographic work has the right to reproduceand sell it, being observant of the restrictions to the exhibition, reproductionand sale of portraits, and not to the detriment of the author’s rights over thephotographic work, if of fine arts protected.

§ 1º The photography, when used by third parties, shall indicate clearlythe name of its author.

§ 2º The reproduction of a photographic work, which is not in perfectconsonance with its original, is forbidden, except in the case of a previousauthorisation by the author.

Chapter V

USE OF PHONOGRAMS

Art. 80. Upon the publication of a phonogram, the producer shall mentionin every sample:


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I. the title of the work and its author;

II. the performer’s name or pseudonym;



Chapter VI

USE OF AN AUDIO-VISUAL WORK

Art. 81. The author’s and performer’s authorisation of a literary, artisticor scientific work with the aim of audio-visual production implies, unlessotherwise agreed, on the consent for its economic use.

§ 1º The exclusivity of the authorisation depends on an express provisionand ceases ten years after the signing of the contract.

§ 2º In every copy of the audio-visual work, the producer shall mention:

I. the title of the audio-visual work;

II. the director’s and other co-author’s names or pseudonyms;

III. the title of the adapted work and its author, if it is the case;

IV. the performing artists;

V. the year of its publication;

VI. their name or trademark which identifies them.

Art. 82. The contract of audio-visual production shall establish that:

I. the payment owed to the co-authors of the work and to the performingartists and musicians by the producer, as well as the time, place and paymentform;

II. the deadline for the conclusion of the work;

III. the producer’s responsibility towards the co-authors, performingartists or musicians, in the case of co-authorship.

Art. 83. The participant of the audio-visual work production whointerrupts their participation temporarily or definitively, will not be able to


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oppose that it be used in the work nor that a third party substitutes them. However, the rights which refer to the part already performed are safeguarded.

Art. 84. In case the co-authors’ payment of an audio-visual work dependson the income of its economic use, the producer shall render account twice ayear, unless otherwise agreed upon.

Art. 85. Unless otherwise agreed, the co-authors of an audio-visual workmay make use of the part which constitutes their personal contribution in adifferent genre.

Sole paragraph. If the producer does not conclude the audio-visual workwithin the established term or if he does not start its exploitation within twoyears as from its conclusion, the use, to which this Art. refers to, is free.

Art. 86. The authoring rights of musical performance related to musi-cal, literary-musical works and phonograms part of audio-visual works are dueto their title-holders by the people responsible for the places and establishments,referred to in art. 68 § 3º of this Law, which show them, or by the televisionstations which broadcast them.

Chapter VII

USE OF DATABASE UNITS

Art. 87. The title-holder of the patrimonial rights of a database willhave the exclusive right to authorise or prohibit, as regards to the form ofexpression of the structure of the referred base:

I. its total or partial reproduction, by whichever means or process;

II. its translation, adaptation, reordering or any other change;

III. the distribution of the original or copies of the database units or of itscommunication to the public;

IV. the reproduction, distribution or communication to the public of theresults of the operations mentioned in section II of this article.

Chapter VIII

USE OF COLLECTIVE WORK

Art. 88. Upon the publishing of a collective work, the organiser shallmention in every issue:


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I. the title of the work;

II. a list of all the participants in alphabetical order, unless otherwiseagreed;



Sole paragraph. To avail oneself of the aforesaid in art. 17 § 1º, theparticipant shall notify the organiser in written, by the delivery of theirparticipation.

TITLE V

RELATED RIGHTS

Chapter I


Art. 89. The norms relative to the rights of the author are applicable,wherever suitable, to the rights of the performing artists or musicians, thephonographic producers and radiobroadcasting companies.

Sole paragraph. The protection of this Law to the rights foreseen inthis article, leave intact and does not affect the guarantees ensured to the authorsof literary, artistic and scientific works.

Chapter II

RIGHTS OF THE PERFORMING ARTISTS AND MUSICIANS

Art. 90. The performing artist or musician has the exclusive right, on anonerous or gratuitous basis, to authorise or prohibit:

I. the arrangement of their interpretation or executions;

II. the reproduction, the public performance and the venue of theirinterpretation or the scheduled executions;

III. the broadcast of their interpretation or executions, scheduled or not;


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IV. the availability of their interpretation or executions to the public, insuch a way that anyone can have access to it, at the time and place of theirchoice;

V. any other manner of use of their interpretation and executions;

§ 1º When several artists participate in the interpretation or in theperformance their rights shall be enforced by the director of the assemblage.

§ 2º The protection to the performing artists and musicians refers to thereproduction of the voice and image, whenever associated to their performances.

Art. 91. The radiobroadcasting companies are allowed to schedule theinterpretations or executions of the artists who have given them their permissionto use in a certain number of broadcasts, allowing for their conservation in thepublic archives.

Sole paragraph. The subsequent re-use of the arrangement, at home orabroad, will only be legal in face of written authorisation of the title-holders ofthe intellectual property included in the programme, and an additional paymentis due to the title-holders for each new use.

Art. 92. The performing artists are entitled to the moral rights of integrityand paternity of their interpretations, inclusive after the cession of thepatrimonial rights, without detriment to the reduction, compactness, editionand dubbing of the work in which they have participated, under theresponsibility of the producer, who will not be able to alter the interpretationof the artist.

Sole paragraph. The decease of whichever participant of an audio-visu-al work, concluded or not, does not impede its exhibition and economicutilisation, nor does it require additional authorisation and the due paymentfor the deceased, according to the terms of the contract and of the law, made infavour of the estate or the heirs.

Chapter III

RIGHTS OF THE PHONOGRAPHIC PRODUCERS

Art. 93. The producer of phonograms has the exclusive right, on anonerous or gratuitous basis, to authorise or prohibit:

I. the direct or indirect repetition, total or partial;


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II. the distribution through the sale or hiring of samples of reproduction;

III. the communication to the public by means of public executions,inclusive through radiobroadcasting;

IV. (VETOED)

V. any other modes of use, in existence or which might be invented.

Art. 94. The phonographic producer is entitled to perceive, from theusers to which art. 68 of this Law and its paragraphs refer to, the pecuniarygains resulting from the public performance of phonograms and share it withthe artists, in the form agreed among them and their associations.

Chapter IV

RIGHTS OF RADIOBROADCASTING COMPANIES

Art. 95. The radiobroadcasting companies are entitled to the exclusiveright of authorising or prohibiting the retransmission, arrangement, repetitionof their broadcasts, as well as the communication to the public, throughtelevision, in public places, not to the detriment of the rights of the title-holdersof intellectual property included in the programming.

Chapter V

DURATION OF THE RELATED RIGHTS

Art. 96. The stated period of protection of the related rights for thephonograms is of seventy years as from January 1st of the year following thearrangement, for transmission, for the broadcasts of radiobroadcastingcompanies; and for presentations and public executions, for the other cases.

TITLE VI

ASSOCIATIONS OF TITLE-HOLDERS OF AUTHORING RIGHTS ANDOF THE RELATED ONES

Art. 97. The authors and title-holders of related rights are allowed toform associations, with no purpose of profit, to exercise and defend their rigts.

§ 1º It is forbidden to belong to more than one association for the collectiveadministration of rights of the same nature.


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§ 2º The title-holder is allowed to transfer, at any given time, to anotherassociation, having to communicate the fact in written to their originalassociation.

§ 3º The associations with headquarters abroad, will be represented inthis country by national associations constituted in the form foreseen in thisLaw.

Art. 98. With the act of affiliation, the associations represent theirassociates for the practice of all acts necessary for the judicial or extrajudicialdefence of their authoring rights, as well as for their exaction.

Sole paragraph. The title-holders of authoring rights are allowed toexercise personally the acts referred to in this article, by means of previouscommunication to the association to which they are affiliated.

Art. 99. The associations will maintain only one central office for levyingand distributing, in common, of the rights related to the public performance ofmusical and literary-musical works and of phonograms, inclusive throughradiobroadcasting and transmission through any other mode, and of theshowing of audio-visual works.

§ 1º The central office, organised in the form foreseen in this article, doesnot operate at profit and will be run and managed by the associations which itbelongs to.

§ 2º The central office and the associations to which this Title refers to,will be the legal representatives of the title-holders, in court and outside court,as their title-holders’ procedural substitutes.

§ 3º The collection of whichever amounts by the central office will onlyoccur through bank deposits.

§ 4º The central office is allowed to have inspectors, who are forbiddento receive from the manager any cash under any pretence.

§ 5º The non-observance of the norm of the preceding § will make theperson to blame, incapacitated for the post of inspector, without detriment ofthe fitting civil and criminal sanctions.

Art. 100. The union or professional association, which gathers not fewerthan one third of the affiliates of an authoring association, will be able to inspectonce a year, after notifying eight days in advance, with the help of an auditor,the accuracy of the accounts rendered to the people they represent.


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TITLE VII

SANCTIONS TO THE VIOLATIONS OF THE AUTHORING RIGHTS

Chapter I


Art. 101. The civil sanctions dealt with in this Chapter, are applicablewithout detriment of the fitting penalties.

Chapter II

CIVIL SANCTIONS

Art. 102. The title-holder, whose work is fraudulently reproduced,divulged or used in any way, may require the apprehension of the samplesreproduced or the cessation of its divulging, without detriment of the fittingcompensation.

Art. 103. Whoever publishes a literary, artistic or scientific work, withoutthe authorisation of the title-holder, will lose to the latter the samplesapprehended and will pay him the price of the ones he sold.

Sole paragraph. Not knowing the number of samples which constitutethe fraudulent edition, the offender will pay an amount corresponding thethree thousand samples, besides the apprehended ones.

Art. 104. Whoever sells, displays for sale, conceals, acquires, distributes,keeps in stock or use work or phonogram fraudulently reproduced, with thepurpose of selling, obtaining direct or indirect gains, advantages, profit, benefitfor themselves or for others, will be mutually responsible with the forger, inthe terms of the preceding articles; as well as the importer and the distributor,which are liable of forgery, in case of reproduction abroad.

Art. 105. The transmission and retransmission, whatever the means orprocess, and the communication to the public of artistic, literary or scientificworks, of performances and of phonograms, carried out despite the violationof their title-holders’ rights, shall be immediately suspended or interrupted bythe competent judiciary authority, without detriment of a daily fine for thebreach and of the other fitting compensations, independently of the applicablecriminal sanctions; in case the violator is proved relapsing into violating the


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title-holders’ rights of author and related, the value of the penalty might bedoubled.

Art. 106. The condemnatory sentence might determine the destructionof all the illicit samples, as well as of the originals, moulds, negatives and otherelements used to carry out the civil illicit act, and also the loss of machinery,equipment and input aimed at that purpose, using them solely to achieve theillicit intent.

Art. 107. Independently of the loss of the equipment used, they areliable of prejudice, never inferior to the value which results from the applicationof the provisions of art. 103 and its sole paragraph, whoever might:

I. falsify, delete, modify or make useless, in any way, the technical devisesinserted in the samples of the work and safeguarded productions to avoid orrestrict its copy;

II. falsify, delete or make useless, in any way, the coded signs aimed atrestricting the communication to the public of works, productions orsafeguarded broadcasts or at avoiding its copy;

III. delete or modify, without authorisation, any information about theadministration of rights;

IV. distribute, import for distribution, issue, communicate or makeavailable for the public, without authorisation, works, performances andexecutions, samples of the scheduled performances in phonograms andbroadcasts, knowing that the information about the administration of rights,coded signs and technical devices were deleted or modified withoutauthorisation.

Art. 108. Whoever, upon the use of an intellectual work of whichevermode, fails to appoint or announce as such, the name, pseudonym or agreedsign of the author and of the performer, besides being liable of moral damages,they will be obliged to disclose their identity in the following way:

I. in the case of radiobroadcasting companies, at the same time at whichthe infringement occurred, for three consecutive days;

II. in the case of graphic or phonographic publication, through theincluding of an erratum in the samples yet to be distributed, without detrimentof communication, highlighting three consecutive times in newspaper of greatcirculation, in the author’s, performer’s, editor’s and producer’s legal residence;


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III. in the case of any other mode of use, through the press, in the modeto which the preceding section refers.

Art. 109. The public execution performed in disagreement with thearticles 68, 97, 98 & 99 of this Law, will subject the responsible to a penaltytwenty time the value which should have been paid originally.

Art. 110. The violation of the authoring rights in public concerts andauditions, taking place in the venues or establishments to which art. 68 refers,their owners, directors, managers, impresarios, or tenants, are mutually liabletogether with the organisers of the events.

Chapter III

PRESCRIPT OF THE LAWSUIT

Art. 111. (VETOED)

TITLE VIII

FINAL AND TRANSITORY PROVISIONS

Art. 112. If a work becomes of public dominion, in consequence of theexpiration of the protection stated period of time, which was of its rightaccording to § 2º Art. 42 of the Law # 5.988, of 14 December 1973, it will nothave the protection stated period of time of the patrimonial rights enlarged, byenforcement of art. 41 of this Law.

Art. 113. The phonograms, books and audio-visual works will besubjected to the stamps and identification signs under the responsibility of theproducer, distributor or importer, without burden for the consumer, with theaim to testify to the enforcement of the legal norms in effect, according to theprecepts of the regulations.

Art. 114. This Law comes into force one hundred and twenty daysafter its publication.

Art. 115. The following are revoked: art. 649 to 673 and 1.346 to 1.362of the Civil Code and the Laws # 4.944 of 6 April 1966; 5.988 of 14 December1973, except for its art. 17 and its §§ 1º2º; 6.800 of 25 June 1980; 7.123 of 12September 1983; 9.045 of 18 May 1995, except for contrary covenant, being inforce the Laws # 6.533 of 24 May 1978 and 6.615 of 16 December 1978.

Brasilia, 19 February 1998 177th of the Independence and 110th of theProclamation of the Republic.

Fernando Henrique CardosoFrancisco Weffort


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Antitrust Law (Law Number 8.884/94)(UPDATED ON NOVEMBER 05, 1998)LAW Number. 8.884 - JUNE 11, 1994

PUBLISHED ON THE OFFICIAL GAZETTE OF THE FEDERALEXECUTIVE (D.O.U). - 13.06.94

Changes the Administrative Council for Economic Defense– CADE - into an autarchy, regulates antitrust measures,and makes other provisions



TITLE I

GENERAL PROVISIONS

Chapter I

OBJECT

Art. 1º This Law sets out antitrust measures in keeping with suchconstitutional principles as free enterprise and open competition, the socialrole of property, consumer protection, and restraint of economic power abuses.

Sole Paragraph. Society at large is entrusted with the legal rightsprotected herein.

Chapter II

TERRITORY

Art. 2º Without prejudice to any agreements and treaties to which Brazilis a party, this Law applies to acts wholly or partially performed within theBrazilian territory, or the effects of which are or may be suffered therein.

Sole Paragraph. Foreign companies that operate or have a branch, agency,subsidiary, office, establishment, agent or representative in Brazil shall be deemedsituated in the Brazilian territory.


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TITLE II

THE ADMINISTRATIVE ECONOMIC PROTECTION COUNCIL - CADE

Chapter I

AUTARCHY

Art. 3º The Administrative Economic Protection Council - CADE, anagency with authority throughout the Brazilian territory and created by LawNo. 4137 of September 10, 1962, shall henceforth become a federal autarchyreporting to the Ministry of Justice, with headquarters and jurisdiction in theFederal District, and duly commissioned for performance of the duties set forthherein.

Chapter II

THE CADE BOARD

Art. 4º The CADE Board shall be composed of a President and six BoardMembers chosen among citizens over than thirty years of age reputed for theirlegal or economic knowledge and unblemished reputation, duly appointed bythe President of the Republic after their approval by the Senate.

§ 1º The term of office of the President and Board Members shall be twoyears, one reelection being hereby permitted.

§ 2º The President and Board Member duties shall be discharged on anexclusive basis; accordingly, no overlapping of positions will be permitted, unlessotherwise provided for in the Constitution.

§ 3º In the event of resignation, death or termination of a CADE President,the senior or eldest Board Member (in this order) will take office as Presidentuntil further appointment thereof, without prejudice to his/her correspondingduties as Board Member.

§ 4º In the event of resignation, death or termination of a CADE BoardMember, a new Board Member shall be appointed for the remaining term ofoffice of the replaced member.

§ 5º In the events set forth in the preceding § or upon expiration of theterms of office of the council members, the Council shall be reduced to lessthan the number established in Art. 49, the time frames set out in articles 28,31, 32, 33, 35, 37, 39, 42, 45, 46, sole paragraph, 52, § 2, 54, paragraphs 4, 6, 7


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and 10, and 59, § 1 of this law shall be considered automatically interrupted,and the case development shall be suspended, and the new terms shall beginimmediately after restructuring of the quorum.

Art. 5º The CADE President or Board Members may only be ousted by adecision of the Senate, a request of the President of the Republic, as a result ofunappealable criminal sentencing of any such member for malicious crime, orin light of disciplinary action as set forth in Law No. 8112 of December 11,1990 and Law No. 8429 of June 2, 1992, as well as owing to violation of any ofthe limitations dealt with in Art. 6 hereof.

Sole Paragraph. Any CADE Member’s absence at three consecutiveordinary meetings, or twenty intermittent ordinary meetings, shall causeautomatic termination of his/her term of office, except for leaves of absenceduly approved by the CADE Board.

Art. 6º The President and Board Members shall not:

I. - receive fees, percentages or other compensation in any way or on anypretext;

II. - act as a self-employed workers;

III. - participate—as controlling parties, officers, managers, agents orattorneys in fact—in any civil, commercial or like companies;

IV. - render opinions on matters of their specialty, even if on a theoreticalbasis, or act as advisors to companies of any kind;

V. - avail themselves of the media to render opinion on cases pendingdecision, or otherwise disparage orders, votes or sentences handed down bythe courts, except for critique in case records, technical works or in the exerciseof court duties; and

VI. - carry out politics- or party-oriented activities.

Chapter III

AUTHORITY OF THE CADE BOARD

Art. 7º The CADE Board shall:

I. - ensure compliance with this Law and its regulations, as well as withthe Board in-house rules;


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II. - resolve on purported violations of the economic order, and apply thepenalties provided for by law;

III. - resolve on proceedings instituted by the Economic Law Office - SDEof the Ministry of Justice;

IV. - resolve on ex officio appeals from the SDE Secretary;

V. - order that action be taken in restraint of violations of the economicorder within the term scheduled therefor;

VI. - approve both the cease-and-desist commitment and the performancecommitment, as well as order SDE to monitor compliance therewith;

VII. - judge appeals against preventive action adopted by SDE or by theBoard reporting official;

VIII. - make its decisions known to the interested parties;

IX. - request information from individuals, agencies, authorities and otherpublic or private entities, with due regard for the confidentiality ensured suchinformation pursuant to law, if any, as well as determine the investigationsrequired for performance of its duties;

X. - request from the Federal Executive Branch agencies and from state,municipal, the Federal District and territorial authorities the acts required forcompliance with this Law;

XI. - retain the performance of examinations, inspections and studies,approving the respective professional fees and other expenditures on a case-by-case basis, all of which shall be borne by the company if it is eventually punishedunder this Law;

XII. - analyze acts or conducts under any circumstance, subject to approvalthereof pursuant to Art. 54 below, and establish a performance commitmentas the case may be;

XIII. - request court execution of its decisions pursuant to this Law;

XIV. - request services and staff from any federal public agencies or entities;

XV. - determine the adoption of administrative and court action by theCADE Attorney General Office;


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XVI. - sign contracts and agreements with Brazilian agencies or entities,and advance to the Minister of Justice for approval any such documents thatare to be signed with foreign or international organisms;

XVII. - answer consultations on matters within its sphere of authority;

XVIII. - make the forms of violation of the economic order known to thepublic;

XIX. - draft and approve its in-house rules on operations, criteria forresolutions, and organization of in-house services, including for the purpose ofestablishing the recess of the Board and the Attorney General Office on accountof vacation; during such period, the statute of limitations as well as the termset forth in Art. 54, § 6 hereof shall be suspended;

XX. - draft the structure applying to the CADE staff, with due regard forArt. 37, II of the Constitution;

XXI. - draft budgetary proposals pursuant to this Law; and

XXII. - appoint the possible substitute of the Attorney General in theevent of absences, dismissal or impairment.

Chapter IV

AUTHORITY OF THE CADE PRESIDENT

Art. 8º The CADE President shall:

I. - act as the CADE legal representative in and out of court;

II. - preside over the CADE Board meetings, with the right to vote thereat,plus a casting vote;

III. - distribute processes by lot at the Board meetings;

IV. - call meetings and organize the corresponding agenda;

V. - comply and cause compliance with the CADE decisions;

VI. - determine that the CADE Attorney General Office take all courtaction required for the execution of the CADE decisions and sentences;

VII. - sign the cease-and-desist commitments, as well as performancecommitments;


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VIII. - submit to the CADE Board for the budgetary proposal approval, aswell as the intended assignment of the staff that is to render services to CADE;and

IX. - guide, co-ordinate and supervise the CADE administrative activities.

Chapter V

AUTHORITY OF THE CADE BOARD MEMBERS

Art. 9º The CADE Board Members shall:

I. - vote on cases and matters submitted to the CADE Board;

II. - issue orders and decisions on the cases for which they act as reportingmembers;

III. - submit to the CADE Board any requirements as to data anddocuments from individuals, agencies, authorities and other public or privateentities, the data and documents that are to be kept confidential pursuant tolaw, as the case may be, as well as order all investigations required forperformance of their duties;

IV. - adopt preventive action, and establish a daily fine for noncompliancetherewith; and

V. - discharge all further duties ascribed thereto under the applicable rules.

Chapter VI

THE CADE ATTORNEY GENERAL OFFICE

Art. 10. An Attorney General Office shall be commissioned withCADE to:

I. - render legal assistance to CADE, and provide for defense thereof incourt;

II. - arrange for judicial execution of CADE decisions and sentences;

III. - subject to the CADE Board preliminary approval, request courtmeasures aiming at curbing violations of the economic order;


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IV. - arrive at court settlements for cases involving violations of theeconomic order, subject to the CADE Board preliminary approval after hearinga representative of the Attorney General of the Republic;

V. - render opinion on cases under the CADE authority;

VI. - ensure compliance with this Law; and

VII. - perform all further action incumbent thereon under the in-houserules.

Art. 11. The Attorney General—appointed by the Minister of Justice,and duly commissioned by the President of the Republic after consultationand approval of the Senate—shall be a Brazilian citizen with unblemishedreputation and renowned legal expertise.

§ 1º The Attorney General shall attend the CADE meetings, without anyright to vote thereat.

§ 2º The Attorney General shall be subject to the same rules on term ofoffice, reelection, disqualification, termination and replacement as thoseapplying to the CADE Board Members.

§ 3º In the event of absences, temporary separation or impairment of theAttorney General, the plenary body will indicate and the CADE President willappoint a possible substitute to act for a period not exceeding ninety (90) days,with no need for Federal Senate approval; such substitute shall be entitled tocompensation for the position held during such substitution.

TITLE III

THE ATTORNEY GENERAL OF THE REPUBLIC AND CADE

Art. 12. The Attorney General of the Republic, after hearing the HigherCouncil, shall appoint a member of the Attorney General Office of the Republicto handle the cases submitted to CADE for review.

Sole Paragraph. CADE may request that the Attorney General Officeof the Republic cause enforcement of the CADE decisions or of the cease-and-desist commitments, as well as that it adopt all court action provided for inArt. 6, XIV (b) of Supplementary Law No. 75 of May 20, 1993.


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TITLE IV

THE ECONOMIC LAW OFFICE

Art. 13. The Economic Law Office of the Ministry of Justice - SDE, asstructured pursuant to law, will be headed by a Secretary appointed by theMinister of Justice from among Brazilian citizens of renowned legal or economicexpertise and unblemished reputation, duly commissioned by the President ofthe Republic.

Art. 14. SDE shall:

I. - ensure compliance with this Law by monitoring and following up onmarket practices;

II. - provide for ongoing follow-up on business activities and practicesfrom individuals or legal entities with overriding control over a relevant marketfor a certain product or service, in order to prevent violations of the economicorder; for such purposes, all pertinent data and documents may be required,with due regard for the confidential status thereof pursuant to law, if any;

III. - carry out preliminary investigations on purported violations of theeconomic order, for further instatement of administrative proceedings;

IV. - acknowledge the lack of grounds or evidence, and shelve thepreliminary investigation records;

V. - request data from individuals, agencies, authorities and other publicor private entities, with due regard for the confidential status thereof underthe law, if any, as well as determine the action required for exercise of its duties;

VI. - commence administrative proceedings intended to investigate andrestrain violations of the economic order;

VII. - appeal ex officio to CADE for shelving of preliminary investigationsor administrative proceedings;

VIII. - send on to CADE, for review, any cases commenced by SDE, if aviolation of the economic order has been duly evidenced;

IX. - sign a cease-and-desist commitment on the agreed conditions andsubmit it to CADE, as well as monitor compliance therewith;

X. - advise CADE of certain conditions for signing of a performancecommitment, and monitor compliance therewith;


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XI. - adopt preventive measures intended to cease the act characterized asa violation of the economic order, and establish the deadline for compliancetherewith as well as a daily fine applying to default thereon;

XII. - receive and substantiate cases to be judged by CADE, includingconsultations, and monitor compliance with the CADE decisions;

XIII. - advise the public authorities as to the adoption of any actionrequired for compliance herewith;

XIV. - carry out studies and researches aiming at improving antitrustpolicies;

XV. - advise the public of the various forms of violation of the economicorder, as well as the means to curb such violations; and

XVI. - perform other duties as provided for by law.

TITLE V

VIOLATIONS OF THE ECONOMIC ORDER

Chapter I

GENERAL PROVISIONS

Art. 15. This Law applies to individuals, public or private companies, aswell as to any individual or corporate associations, established de facto and dejure—even on a provisional basis—irrespective of a separate legal nature, andnotwithstanding the exercise of activities regarded as a legal monopoly.

Art. 16. The company and each of its managers or officers shall be jointlyliable to the various forms of violation of the economic order.

Art. 17. The companies or entities within a same economic group defacto and de jure shall be jointly liable to violations of the economic order.

Art. 18. The legal nature of any party charged with violation of theeconomic order may be disregarded whenever any such violation entails abuseof power and rights, violation of the law, illicit facts or acts, or any breach ofbylaws or articles of association. This legal nature shall also be disregarded inthe event of bankruptcy, insolvency, discontinuance or suspended operationsof the underlying company due to poor management thereof.


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Art. 19. The antitrust measures set forth herein do not exclude anypunishment inflicted on other legal acts pursuant to law.

Chapter II

VIOLATIONS

Art. 20. Notwithstanding malicious intent, any act in any way intendedor otherwise able to produce the effects listed below, even if any such effectsare not achieved, shall be considered a violation of the economic order:

I. - to limit, restrain or in any way injure open competition or freeenterprise;

II. - to control a relevant market of a certain product or service;

III. - to increase profits on a discretionary basis; and

IV. - to abuse one’s market control.

§ 1º Achievement of market control as a result of competitive efficiencydoes not entail an occurrence of the illicit act provided for in item II above.

§ 2º Market control occurs when a company or group of companiescontrols a substantial share of a relevant market as supplier, agent, purchaseror financier of a product, service or related technology.

§ 3º The dominant position mentioned in the preceding § is presumedwhen a company or group of companies controls twenty percent (20%) of therelevant market; this percentage is subject to change by CADE for specific sectorsof the economy.

Art. 21. The acts spelled out below, among others, will be considered aviolation of the economic order, to the extent applicable under Art. 20 anditems thereof:

I. - to set or offer in any way—in collusion with competitors—prices andconditions for the sale of a certain product or service;

II. - to obtain or otherwise procure the adoption of uniform or concertedbusiness practices among competitors;

III. - to allot markets for finished or semi-finished products or services, orfor supply sources of raw materials or intermediary products;


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IV. - to limit or restrain market access by new companies;

V. - to pose difficulties for the establishment, operation or developmentof a competitor company or supplier, purchaser or financier of a certain productor service;

VI. - to bar access of competitors to input, raw material, equipment ortechnology sources, as well as to their distribution channels;

VII. - to require or grant exclusivity in mass media advertisements;

VIII. - to agree in advance on prices or advantages in public oradministrative bids;

IX. - to affect third-party prices by deceitful means;

X. - to regulate markets of a certain product or service by way ofagreements devised to limit or control technological research and development,the production of products or services, or to dampen investments for theproduction of products and services or distribution thereof;

XI. - to impose on distributors, retailers and representatives of a certainproduct or service retail prices, discounts, payment conditions, minimum ormaximum volumes, profit margins, or any other marketing conditions relatedto their business with third parties;

XII. - to discriminate against purchasers or suppliers of a certain productor service by establishing price differentials or discriminatory operatingconditions for the sale or performance of services;

XIII. - to deny the sale of a certain product or service within the paymentconditions usually applying to regular business practices and policies;

XIV. - to hamper the development of or terminate business relations foran indeterminate period, in view of the terminated party’s refusal to complywith unreasonable or non-competitive clauses or business conditions;

XV. - to destroy, render unfit for use or take possession of raw materials,intermediary or finished products, as well as destroy, render unfit for use orconstrain the operation of any equipment intended to manufacture, distributeor transport them;

XVI. - to take possession of or bar the use of industrial or intellectualproperty rights or technology;


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XVII. - to abandon of cause abandonment or destruction of crops orharvests, without provenly good cause;

XVIII. - to unreasonably sell products below cost;

XIX. - to import any assets below cost from an exporting country otherthan those signatories of the GATT Antidumping and Subsidies Codes;

XX. - to discontinue or greatly reduce production, without good cause;

XXI. - to partially or fully discontinue the company’s activities, withoutgood cause;

XXII. - to retain production or consumer goods, except for ensuringrecovery of production costs;

XXIII. - to condition the sale of a product to acquisition of another orcontracting of a service, or to condition performance of a service to contractingof another or purchase of a product; and

XXIV. - to impose abusive prices, or unreasonably increase the price of aproduct or service.

Sole Paragraph. For the purpose of characterizing an imposition ofabusive prices or unreasonable increase of prices, the following items shall beconsidered, with due regard for other relevant economic or marketcircumstances:

I. - the price of a product or service, or any increase therein, vis-à-vis anychanges in the cost of their respective input or with quality improvements;

II. - the price of a product previously manufactured, as compared to itsmarket replacement without substantial changes;

III. - the price for a similar product or service, or any improvement thereof,on like competitive markets; and

IV. - the existence of agreements or arrangements in any way, whichcause an increase in the prices of a product or service, or in their respectivecosts.

Art. 22. (VETOED)

Sole Paragraph. (VETOED)


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Chapter III

PENALTIES

Art. 23. The following antitrust penalties shall apply:

I. - for companies: a fine from one to thirty percent of the gross pretaxrevenue thereof as of the latest financial year, and such fine shall by no meansbe lower than the advantage obtained from the underlying violation, ifassessable;

II. - for managers directly or indirectly liable to their company’s violation:a fine from ten to fifty percent of the fine imposed on the company, whichshall be personally and exclusively imposed on the manager; and

III. - in the case of other individuals and other public or private legalentities, as well as any de facto or de jure associations of entities or persons,even temporary ones, with or without legal identity, that do not engage inbusiness activities, when it is not feasible to use the gross sales value, the finewill be 6,000 (six thousand) to 6,000,000 (six million) UFIR or any otherindex replacing it.

Sole Paragraph. Fines imposed on recurring violations shall be doubled.

Art. 24. Without prejudice to the provisions of the preceding article, thefines listed below may be individually or cumulatively imposed on violations,whenever the severity of the facts or the public interest so requires:

I. - at the violator ’s expense, half-page publication of the summarysentence in a court-appointed newspaper for two consecutive days, from oneto three consecutive weeks;

II. - ineligibility for official financing or participation in bidding proces-ses involving purchases, sales, works, services or utility concessions with thefederal, state, municipal and the Federal District authorities and related entities,for a period equal to or exceeding five years;

III. - annotation of the violator on the Brazilian Consumer ProtectionList;

IV. - recommendation that the proper public agencies:

(a) grant compulsory licenses for patents held by the violator; and


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(b) deny the violator installment payment of federal overdue debts, ororder total or partial cancellation of tax incentives or public subsidies;

V. - the company’s spin-off, transfer of corporate control, sale of assets,partial discontinuance of activities, or any other antitrust measure required forsuch purposes.

Art. 25. If any acts or situations detrimental to the economic order arenot discontinued after a CADE Board decision to this effect, or in the eventpreventive measures or any cease-and-desist commitment set forth herein arenot complied with, a daily fine equal to or higher than 5,000 (five thousand)Fiscal Reference Units - UFIR or replacing index shall apply, which fine may beincreased as many as twenty times in accordance with the severity of theviolation and the violator’s economic status.

Art. 26. In the event any data or documents requested by CADE, SDE,SEAE or other public entity acting under this Law are unreasonably denied,concealed, tampered with or delayed, this shall constitute a violation subjectto a daily fine of 5,000 (five thousand) UFIR, and the fine may be increased upto twenty-fold in keeping with the violator’s economic status.

Art. 27. The penalties provided for in this Law shall apply with dueregard for:

I. - the severity of the violation;

II. - the violator’s good faith;

III. - the advantages obtained or envisaged by the violator;

IV. - actual or threatened occurrence of the violation;

V. - the extent of damages or threatened damages to open competition,the Brazilian economy, consumers, or third parties;

VI. - the adverse economic effects on the market;

VII. - the violator’s economic status; and

VIII. - recurrences.


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Chapter IV

PRESCRIPTION

Art. 28. Revoked by Provisory Measure Number 1.708-4 of 27.10.98(D.O.U. from 29.10.98).

Chapter V

CAUSE OF ACTION

Art. 29. Injured parties may—for themselves or for the privies underarticle 82 of Law No. 8078 of September 11, 1990—defend their individual ordiffuse interests in court by way of antitrust measures and the awarding oflosses and damages suffered in connection therewith, irrespective of thecorresponding administrative proceeding which shall not be stayed in view ofthe court action.

TITLE VI

ADMINISTRATIVE PROCEEDINGS

Chapter I

PRELIMINARY INVESTIGATIONS

Art. 30. SDE may carry out preliminary investigations ex officio or atthe written and reasonable request of interested parties; no disclosure as to anysuch investigations shall be made whenever the evidence as to purportedviolation of the economic order does not suffice to immediate commencementof administrative proceedings.

§ 1º During preliminary investigations, the SDE Secretary may adoptany of the steps set forth in Art. 35 hereof, including requests for clarificationaddressed to the defendant.

§ 2º Commencement of administrative proceedings out of formalcomplaints addressed by the Senate or the House of Representatives is notconditioned to preliminary investigations.

Art. 31. After conclusion of preliminary investigations within sixty days,the SDE Secretary shall order commencement of a corresponding administrativeproceeding or the shelving thereof, subject to ex officio appeal to CADE in thislatter case.


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Chapter II

COMMENCEMENT AND DISCOVERY OF ADMINISTRATIVEPROCEEDINGS

Art. 32. Administrative proceedings shall be instituted no later thaneight days after cognizance of the underlying fact, formal complaint or closingof the preliminary investigations, as per order issued by the SDE Secretaryproviding for the facts to be verified thereunder.

Art. 33. The defendant shall be summoned to file a defense within fifteendays.

§ 1º The initial summons shall bear the entire tenor of the order providingfor institution of the administrative proceeding and the corresponding formalcomplaint, as the case may be.

§ 2º The defendant shall be first personally summoned by mail againstreceipt or, in case of failure thereof, by notice published in the Official Gazetteof the Federal Executive and in a newspaper widely circulatedin the state in which the defendant is resident or headquartered, with dueregard for the periods required for attachment of the receipt notice or publication,as the case may be.

§ 3º Any summons under subsequent proceedings shall be made bypublication in the Official Gazette of the Federal Executive, in which the nameof the defendant and respective attorney shall be mentioned.

§ 4º The defendant’s holders, officers or managers, or duly appointedattorney, may follow up on administrative proceedings, with full access to thecase records at SDE and CADE.

Art. 34. Failure to file a defense in due course after duly notified to thateffect will entail the defendant’s judgment by default and acknowledgment ofthe charges against it/him, subject to all further terms irrespective of priornotice in that respect. The in absentia defendant may take part in any phase ofthe proceeding without recourse of preceding acts.

Art. 35. Upon lapse of time for filing a defense, SDE will orderinvestigations and the production of evidence required thereby; SDE may orderthat the defendant, any individuals or companies, public entities or agenciesprovide data, clarifications or documents within fifteen days, with due regardfor the confidentiality applying thereto under the law, as the case may be.


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Sole Paragraph. The investigations and evidence required by the SDESecretary, including hearing of witnesses, shall be concluded within forty-fivedays, extendable for a like period with good cause.

Art. 36. Federal authorities, as well as officers of autarchies, federalgovernment-owned companies and mixed-capital companies, shall render allassistance and collaboration required by CADE or SDE, including as regardspreparation of technical reports on the matters under the authority thereof,under penalty of liability.

Art. 37. The defendant shall produce any evidence within forty-fivedays after submission of defense, as well as put forth new documents at anytime before the discovery phase lapses.

Sole Paragraph. The defendant may ask the SDE Secretary to set out adate, time and place for hearing of a maximum of three witnesses.

Art. 38. The Economic Policy Secretariat of the Ministry of Finance(SEAE) shall be informed by official letter of the institution of any administrativeproceedings, and the Secretariat may elect to render an opinion on the matterswithin its sphere of authority, before the discovery phase lapses.

Art. 39. Upon conclusion of the discovery phase, the defendant will besummoned to put forth his/its final arguments within five days, after whichthe SDE Secretary will issue a substantiated report resolving on forwarding ofthe case records to CADE for review or shelving thereof, subject to an ex officioappeal to CADE in this latter case.

Art. 40. The SDE Secretary, the CADE members, and their civil servantsand officials shall exert their best efforts to develop and conclude preliminaryinvestigations and administrative proceedings in the interest of properexpedition as required for clarification of the facts, under penalty of liability.

Art. 41. The SDE Secretary decisions cannot be appealed to higher ranks.

Chapter III

CADE JUDGMENT ON ADMINISTRATIVE PROCEEDINGS

Art. 42. Once the proceedings have been found admissible, the CADEPresident will randomly distribute such proceedings to the Reporting Official,who will be afforded a twenty-day term to render an opinion thereon.


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Art. 43. The reporting official may order supplementary investigationsor request further information pursuant to Art. 35 hereof, as well as allow forthe production of new evidence to the case whenever he/she considers theexisting data insufficient for a final determination on the case.

Art. 44. Upon invitation of the CADE President in response to anindication of the reporting official, any person may provide CADE withclarifications on relevant matters.

Art. 45. Upon board judgments—the date of which will be made knownto the parties at least five days in advance—the Attorney General and thedefendant, or his/its attorney, will be respectively offered the floor for fifteenminutes each.

Art. 46. The CADE decision—which in any event shall be dulysubstantiated against violations of the economic order—shall contain:

I. - a detailed report on the violating acts, and an indication as to theantitrust action to be taken by the proper authorities;

II. - the terms for commencement and conclusion of the action referredto in the preceding item;

III. - the applicable fine; and

IV. - a daily fine to apply while the violation is in effect.

Sole Paragraph. The CADE decision shall be published within five daysin the Official Gazette of the Federal Executive.

Art. 47. CADE shall monitor compliance with its decisions.

Art. 48. Total or partial noncompliance with the CADE decision shall bereported to the CADE President, who will ask the Attorney General to providefor execution thereof via court channels.

Art. 49. The CADE decisions shall be taken by majority vote, with theattendance of a minimum of five members.

Art. 50. The CADE decisions do not qualify for Executive Branch review;accordingly, any such decisions shall be promptly executed, the Attorney Ge-neral Office being then advised in this respect for the purpose of taking all legalaction within its sphere of authority.


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Art. 51. The CADE regulations and in-house rules shall further regulateadministrative proceedings.

Chapter IV

PREVENTIVE MEASURES AND CEASE-AND-DESIST ORDERS

Art. 52. The SDE Secretary or reporting official may—upon his/her owninitiative or at the request of the CADE Attorney General—adopt preventivemeasures in any instance of administrative proceedings, whenever there aresigns or sound reasons to believe that the defendant directly or indirectly causedor may cause irreparable or substantial damages to the market, or that he/itmay render the final outcome of the proceedings ineffective.

§ 1º The preventive measures issued by the SDE Secretary or reportingofficial shall order prompt cessation of damaging acts and the resumption ofthe preceding situation, if reasonably feasible, as well as impose a daily finepursuant to Art. 25 hereof.

§ 2º The SDE Secretary or CADE reporting official decision on adoptionof preventive measures may be voluntarily appealed to the CADE Board withinfive days, without suspensive effects.

Chapter V

CEASE-AND-DESIST COMMITMENTS

Art. 53. CADE or SDE—ad referendum CADE—may agree on acommitment to cease acts under investigation in any instance of administrativeproceedings, which commitment shall by no means entail a confession as tothe matter under analysis nor acknowledgment of guilt for the acts thereunder.

§ 1º The commitment shall provide for:

a) the defendant’s commitment to cease the action under investigationin due course;

b) a daily fine to be imposed in the event of default under Art. 25 hereof;and

c) the defendant’s commitment to issue periodical reports on thedefendant’s market performance, and an undertaking to make properauthorities aware of any changes in its corporate structure, control,activities and location.


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§ 2º The case will be on hold while the cease-and-desist commitment isduly complied with, and after a pre-established time this case will be shelved ifall conditions set out in the corresponding commitment have been fully met.

§ 3º The conditions spelled out in the commitment may be changed byCADE if they are provenly overburdensome for the defendant, provided thatany such changes do not cause damages to third parties or to the society atlarge, and that the new conditions do not entail a violation of the economicorder.

§ 4º The cease-and-desist commitment constitutes an extrajudicialexecution instrument; accordingly, execution of this commitment shall bepromptly petitioned in the event of default thereon or if monitoring thereof isin any way hampered, pursuant to articles 60 et seq. hereof.

TITLE VII

MONITORING MECHANISMS

Chapter I

MONITORING OF ACTS AND AGREEMENTS

Art. 54. Any acts that may limit or otherwise restrain open competition,or that result in the control of relevant markets for certain products or services,shall be submitted to CADE for review.

§ 1º CADE may authorize any acts referred to in the main section of thisarticle, provided that they meet the following requirements:

I. - they shall be cumulatively or alternatively intended to:

a) increase productivity;b) improve the quality of a product or service; orc) cause an increased efficiency, as well as foster the technological or

economic development;

II. - the resulting benefits shall be ratably allocated among theirparticipants, on the one part, and consumers or end-users, on the other;

III. - they shall not drive competition out of a substantial portion of therelevant market for a product or service; and

IV. - only the acts strictly required to attain an envisaged objective shallbe performed for that purpose.


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§ 2º Any action under this Art. may be considered lawful if at least threeof the requirements listed in the above items are met, whenever any such actionis taken in the public interest or otherwise required to the benefit of the Brazilianeconomy, provided no damages are caused end-consumers or -users.

§ 3ºv The acts dealt with in the main section of this Art. also include anyaction intended for any form of economic concentration, whether throughmerger with or into other companies, organization of companies to controlthird companies or any other form of corporate grouping, when the resultingcompany or group of companies accounts for twenty percent (20%) of a relevantmarket, or in which any of the participants has posted in its latest balancesheets an annual gross revenue equivalent to R$ 400,000,000 (four hundredmillion reais).

§ 4º The acts dealt with in the main section of this Art. shall be submittedto SDE—duly accompanied by three counterparts of the correspondingdocumentation—in advance or no later than fifteen business days after theoccurrence thereof, and SDE shall promptly forward one such counterpart toCADE and another to SEAE.

§ 5º Noncompliance with the deadlines set forth in the preceding § willbe punishable with a fine in an amount between 60,000 (sixty thousand) UFIRand 6,000,000 (six million) UFIR, imposed by CADE without prejudice to theopening of an administrative proceeding pursuant to Art. 32 hereof.

§ 6º Upon receipt of the SEAE technical report issued within thirty days,SDE shall pronounce thereon within this same period and then send the caseand evidentiary documents on to the CADE Board, which shall resolve thereonwithin sixty days.

§ 7º The effectiveness of any acts dealt with in this Art. will be conditionedto approval thereof, which approval shall be retroactive to the date of occurrenceof such acts; if not looked into by CADE within the sixty-day period establishedin the preceding paragraph, the acts referred to above will be deemedautomatically approved.

§ 8º The terms set forth in paragraphs 6 and 7 hereof will be stayed whilethe clarifications and documents considered essential for review of the case byCADE, SDE or SEAE are not submitted as requested.

§ 9º In the event the acts specified in this Art. are subject to suspensiveconditions or have already caused fiscal or other effects to third parties, theCADE Board—if it elects to deny approval thereof—shall determine that all


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applicable action be taken to totally or partially revert—by way of dissolution,spin-off or sale of assets, partial cessation of activities, among others—anyaction or procedure damaging to the economic order, notwithstanding any ci-vil liability for losses and damages caused third parties.

§ 10. Without prejudice to the obligations of the parties involved, anychange in the stock control of publicly-held companies or registration ofamalgamations shall be reported to SDE by the Securities Commission - CVMand by the Brazilian Commercial Registry Department of the Ministry ofIndustry, Trade and Tourism - DNRC/MICT, respectively, within five businessdays for the SDE review, if applicable.

Art. 55. The approval dealt with in the preceding Art. may be reviewedby CADE ex officio or at the SDE request, if this approval was based on false ormisleading information rendered by the interested party, in the event of defaulton obligations assumed hereunder, or if the intended benefits have not beenattained.

Art. 56. The commercial registries or corresponding state entities cannotfile any acts related to organization, transformation, amalgamation, merger orgrouping of companies, as well as changes in incorporation acts, unless all suchacts contain:

I. - a clear-cut and detailed statement as to the subject matter thereof;

II. - the interest of each partner, and the term for capitalization thereof;

III. - full name and identification of each partner;

IV. - the place where the headquarters is located and its respective address,including as regards any declared branches;

V. - full name and identification of the company’s officers;

VI. - the term of duration of the company; and

VII. - the number, type and value of the outstanding stock.

Art. 57. Articles of dissolution shall state the reasons thereof, apart froma statement re the amount ascertained among the partners and an indicationof the persons that are to assume the company’s assets and liabilities.


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Chapter II

PERFORMANCE COMMITMENT

Art. 58. The CADE Board will define performance commitments to beassumed by any interested parties that submitted acts for review pursuant toArt. 54 hereof, so as to ensure compliance with the conditions established in §1 thereof.

§ 1º Performance commitments will take into consideration the extentof international competition in a certain industry and their effect onemployment levels, among other relevant circumstances.

§ 2º Performance commitments shall provide for volume or qualityobjectives to be attained within predetermined terms, compliance with whichwill be monitored by SDE.

§ 3º Failure without good cause to comply with performancecommitments shall cause the CADE approval to be revoked pursuant to Art.55 hereof, followed by the opening of an administrative proceeding for theadoption of the applicable measures.

Chapter III

CONSULTATION

Art. 59. Revoked by article 83 Law Number 9.069, of 29.06.95 (D.O.U.from 30.06.95).

TITLE VIII

COURT EXECUTION OF CADE DECISIONS

Chapter I

PROCESSING

Art. 60. The CADE Board decisions imposing fines, as well as obligationsto do or not to do, constitute an extrajudicial execution instrument.

Art. 61. Executions exclusively intended to collection of fines shall becarried out pursuant to Law No. 6830 of September 22, 1980.


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Art. 62. In the event of executions intended to collection of fines andcompliance with obligations to do or not to do, the courts shall order specificperformance of any such obligations, or otherwise provide for acts that ensurean outcome equivalent to compliance therewith in practical terms.

§ 1º An obligation to do or not to do can only lead into a suit for lossesand damages its specific performance or obtainment of an equivalent outcomein practical terms is not possible.

§ 2º Losses and damages shall be paid without prejudice to any applicablefines.

Art. 63. Execution shall be carried out by all means, including by way ofintervention in the company, if necessary.

Art. 64. The CADE decisions shall be executed at the federal courts ofthe Federal District, or at the courts with jurisdiction over the executed party’sheadquarters or domicile, at the CADE discretion.

Art. 65. Motions or like action against an execution instrument shallnot stay the execution itself, unless an amount corresponding to the finesimposed is deposited in court, and a bond is posted as determined by the courtsto ensure compliance with a final decision on the case, including as regardsdaily fines.

Art. 66. Depending on the severity of the violation of the economicorder, and should there be sound reasons to believe in irreparable or substantialdamages, the courts may order prompt adoption of all or a portion of the actionrequired under the execution instrument, notwithstanding the deposit of finesin court or the posting of bonds.

Art. 67. Daily fines on an ongoing violation shall be apply as from thedeadline established by CADE for voluntary compliance with the CADEdecision, up to the day of actual performance thereof.

Art. 68. - The execution of CADE decisions shall be afforded priorityover other kinds of action, except for habeas corpus and writ of mandamus.

Chapter II

JUDICIAL INTERVENTION

Art. 69. The courts shall order intervention in a company wheneverrequired to ensure specific performance hereunder, and appoint a receiver.


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Sole Paragraph. The court decision on intervention shall be dulysubstantiated, as well as accurately establish the action to be taken by theappointed receiver.

Art. 70. If the executed party rebuts a court-appointed receiver withinforty-eight hours on the arguments of ineptitude or lack of good standing, andif this claim is duly evidenced in three days, the courts shall render a decisionthereon within this same period.

Art. 71. If the rebuttal is granted, the courts shall appoint another receiverwithin five days.

Art. 72. The intervention may be terminated early if the obligation thatgave rise thereto has been provenly complied with in full.

Art. 73. The court intervention shall be limited to those acts requiredfor compliance with the court decision that gave rise thereto, and shall beeffective for a maximum period of one hundred and eighty days; the receivershall be held liable for his/her acts and omissions, especially in the event ofabuse of power and departure from the original purposes of his/her appointment.

§ 1º The receiver will be subject to articles 153 through 159 of Law No.6404 of December 15, 1976, to the extent applicable.

§ 2º The receiver will be entitled to a compensation stipulated by thecourts, which may replace him/her at any time and whenever the receiverbecomes insolvent, is charged with active or passive corruption or malfeasancein office, or violation of his/her duties.

Art. 74. The courts may withdraw the company’s managers from theirduties if they are provenly preventing performance of acts incumbent on thereceiver. Any such managers shall be replaced as provided for in the company’sbylaws or articles of association.

§ 1º If any managers still prevent the receiver from taking proper actionafter adoption of the procedures set forth in the main section of this article,then the courts shall proceed as per § 2 below.

§ 2º If a majority of the company’s managers deny assistance to thecourt-appointed receiver, the courts shall order that the receiver take over thecompany’s management.


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Art. 75. The receiver shall:

I. - perform or order performance of all acts required under the executionprocess;

II. - advise the courts of any irregularities committed by the company’smanagement and of which the receiver may become aware; and

III. - submit to the courts a monthly report on his/her activities.

Art. 76. The expenses arising from the intervention hereunder shall beborne by the executed party.

Art. 77. Upon lapse of the intervention, the receiver shall provide thefederal courts with a detailed report on his/her action, and either propose thedismissal or shelving of the case or ask for an extension of the interventionperiod should the execution decision have not been fully performed in duecourse.

Art. 78. Whoever opposes or prevents any intervention or, aftertermination thereof, performs any acts that directly or indirectly annul its effectsin whole or in part, or even fails to comply with legal orders from the court-appointed receiver, will be held criminally liable for resistance, disobedience orcoercion under the execution process, pursuant to articles 329, 330 and 344 ofthe Penal Code.

TITLE IX

FINAL AND TEMPORARY PROVISIONS

Art. 79. (VETOED)

Sole Paragraph. (VETOED)

Art. 80. The CADE Attorney shall henceforth become an Attorney Ge-neral official duly commissioned to the autarchy created hereunder, jointlywith the CADE President and Board Member positions.

Art. 81. The Executive Branch shall send to the Congress within sixtydays a bill of law on the permanent staff of the new autarchy, as well as on theduties and compensation applying to the CADE President, the Board Members,and the Attorney General.


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§ 1º While CADE is not provided with staff of its own, civil servants maybe temporarily assigned to this autarchy by commission or otherwise, withoutprejudice to the remuneration and other benefits originally afforded thereto,including for the purpose of representing this autarchy in court.

§ 2º The CADE President shall prepare and submit to the Board forapproval a list of servants required for the agency, who may be placed at SDEdisposal.

Art. 82. (VETOED)

Art. 83. The Code of Civil Procedure, as well as Laws Nos. 7347 of July24, 1985 and 8078 of September 11, 1990, also apply to the administrative andcourt proceedings set forth herein.

Art. 84. The fines provided for herein shall be converted into Braziliancurrency on the date of actual payment thereof, duly collected to the Funddealt with in Law No. 7347 of July 24, 1985.

Art. 85. Art. 4, VII of Law No. 8137 of December 27, 1990 shall henceforthread as follows:

“Art. 4. (...)

VII. - increase without good cause the price of a certain product or service,in view of one’s market control.”

Art. 86. Art. 312 of the Code of Criminal Procedure shall henceforthread as follows:

“Art. 312. Preventive imprisonment may be decreed so as to safeguardpublic or economic order in the interest of the criminal process, or to ensureenforcement of criminal laws, whenever a crime was provenly committed, orif there is sufficient evidence as to its perpetrator.”

Art. 87. Article 39 of Law No. 8078 of September 11, 1990 shall henceforthread as follows, with the additional items below:

“Art. 39. The supplier of a certain product or service cannot, amongother abusive practices:

(...)

IX. - refuse to sell products or render services directly to whomever iswilling to purchase them against prompt payment, except for intermediationcases duly regulated by special laws; and


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X. - increase without good cause the price of a certain product or service.”

Art. 88. Art. 1 of law No. 7347 of July 24, 1985 shall henceforth read asfollows, with the additional item below:

“Art. 1º Without prejudice to class actions, this Law applies to actionsfor moral and property damages arising from:

(...) V. - violation of the economic order.”

Sole Paragraph. Art. 5, II of Law No. 7347 of July 24, 1985 shallhenceforth read as follows:

“Art. 5º (...)

II. - include in its institutional purposes the protection to the environment,consumers, economic order, open competition, or the artistic, aesthetic,historical, tourism, and landscape heritage; (...)”

Art. 89. - CADE shall be invited to take part as assistant in court actionsinvolving application of this Law.

Art. 90. The periods for consultations submitted under Art. 74 of LawNo. 4137 of September 10, 1962, as amended by Art. 13 of Law No. 8158 ofJanuary 8, 1991, are hereby interrupted, with due regard for Title VII, ChapterI hereof.

Art. 91. This Law does not apply to dumping and subsidies cases dealtwith in the Accords for Implementation of Art. VI of the General Agreementon Customs Tariffs and Trade, duly enacted by Decrees Nos. 93941 and 93962of January 16 and 22, 1987, respectively.

Art. 92. All provisions to the contrary are hereby revoked, as are LawsNos. 4137 of September 10, 1962; 8158 of January 8, 1991; and 8002 of March14, 1990, except for Art. 36 of Law No. 8880 of May 27, 1994, which remainseffective.

Art. 93. This Law shall be effective starting at its publishing date.


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14.4. Conversion Table - Shoes and Clothing Women’sDresses, Skirts and Coats

Brazil 38 40 42 44 46 48 50USA 4 6 8 10 12 14 16 18Europe 38 40 42 44 46 48 50 52

Sweaters and BlousesBrazil 38 40 42 44 46 48 50USA 6 8 10 12 14 16 18Europe 40 42 44 46 48 50 52

ShoesBrazil 35 36 37 38 39USA 3 4 5 6 7 8 9 10 11Europe 34 35 36 37 38 39 40 41 44

Men’sSuits

Brazil 46 48 50 52 54USA 34 36 38 40 42 44 46 48Europe 34 36 38 40 42 44 46 48

ShirtsBrazil 35 37 39 40 41 42 43 44USA 14 15 15.5 16 16.5 17 17.5 18Europe 36 38 39 41 42 43 44 45

ShoesBrazil 39 40 41 42 43 44USA 7.5 8 8.5 9 9.5 10 10.5 11Europe 39 40 41 42 43 44

Children’sClothes

Brazil 2 4 6 8 10 12 14 16USA 2 e 3 4 e 5 6 7 e 8 10 12 14 16Europe 2 e 3 4 e 5 6 e 7 8 e 9 10 e 11 12 14 14+

ShoesBrazil 24 e 2526 e 27 28 29 30 31 32USA 7.5 8.5 9.5 10.5 11.5 12.5 13.5Europe 24 25.5 27 28 29 30 32


160